- The SEC accuses Binance US of evading transparency in its operations.
- Binance US’s alleged non-compliance likened to navigating a “house of mirrors”.
- Mounting tension arises as top Binance US executives leave amid regulatory heat.
As Binance US faces regulatory backlash, the SEC amplifies its efforts to shed light on the crypto exchange’s asset transparency, raising crucial questions on customer asset management and custodial practices.
SEC’s Relentless Pursuit of Binance US
On Monday, the U.S. Securities and Exchange Commission (SEC) delivered a strong critique against Binance US, asserting that the crypto exchange has been elusive in its cooperation. The SEC’s probe into Binance US’s operations was metaphorically described as “navigating a house of mirrors”, emphasizing the regulator’s struggle in obtaining clear and straightforward information from the exchange.
Accusations of Evasiveness and Regulatory Violations
Binance US, officially known as BAM Trading Services Inc., faced criticism in Monday’s court documents, with the SEC highlighting “half-hearted claims of irrelevance, prejudice, and burden.” The tension between Wall Street’s chief regulator and Binance has been escalating since June, when Binance, Binance US, and CEO Changpeng “CZ” Zhao were slapped with a significant lawsuit. The lawsuit accused them of contravening securities regulations. The regulator’s primary concern is to secure internal documents detailing the company’s modus operandi, especially in relation to customer assets.
Binance US’s Pushback on SEC’s Demands
Initially, Binance US seemed amenable to cooperate, but later changed its stance, dubbing the SEC’s requirements as “unreasonable demands”. The regulator’s growing impatience was evident earlier this month when it chided Binance for its alleged “lack of transparency” during the investigative process. In a recent turn of events, ahead of today’s court hearing, the SEC stated that Binance US has been considerably uncooperative, especially concerning the custody of customer assets. This comes in the wake of a series of resignations from top executives at Binance US, intensifying the urgency of the SEC’s inquiries.
SEC Zooms in on Binance’s Custody Platform, Ceffu
The regulatory body underscored its concerns about Binance’s custody platform, Ceffu, on Monday. It alleges that Ceffu plays a pivotal role in the custody of assets on Binance US. Binance, however, remains resolute in its claim that Binance US operates as an autonomous entity, separate from its global operations. The conflict is slated for further deliberation at a hearing scheduled for 3pm ET today, September 18.
Conclusion
The tussle between Binance US and the SEC is emblematic of the broader regulatory challenges faced by crypto entities. As the digital currency landscape rapidly evolves, regulatory bodies worldwide are intensifying their oversight, striving for transparency and accountability. This episode serves as a stark reminder to crypto exchanges and stakeholders of the importance of compliance and the impending challenges they might face in the increasingly scrutinized domain.
