Binance, the world’s biggest crypto exchange has been in a legal battle with the US regulating body in the whole of 2023 so far. In the most recent proceedings, the US Securities and Exchange Commission (SEC) filed a motion seeking depositions, an inspection, and communication from the exchange.
In a filing on September 14, 2023, the commission accused Binance.US of not cooperating in the ongoing investigation against the crypto exchange.
The SEC reports that “the Court entered a Consent Order in which all of the Defendants—including BAM Trading Inc. and BAM Management US Holdings Inc. (together, “BAM”)—agreed to provide expedited discovery and other relief relating to the custody, security, and availability of U.S. customer assets and those of BAM itself.”
The court issued the order due to concerns about the exchange’s offshore financial activities, especially related to alleged transfers of US customer funds abroad, as stated by the commission.
The commission also claims that despite the court’s order, BAM (Binance.US’ mother company) refuses to provide adequate information and documentation “to ensure that BAM’s Customer Assets are not at the mercy of Defendants Binance Holdings Limited (“Binance”) and Changpeng Zhao, two persons who view themselves outside the reach of the Court.”
The SEC said BAM produced about 220 documents, many of which are “unintelligible screenshots and documents without dates or signatures.”
The SEC’s argument centers on Ceffu, formerly known as Binance Custody, and its potential use by Binance US for transferring customer funds offshore.
The accusations also go on to include “inconsistent representations about key facts, slow-rolled small productions of documents and information, and stonewalled on entire categories of information that would likely shed light on its shaky assertions concerning the custody of customer assets.”
As a result of the accusations, the SEC requested an investigation into the exchange, which was denied by the US District Judge Zia Faruqui. However, the court ordered Binance US to provide additional documentation and told Binance US that it’s not convinced it has total autonomy over its assets and funds owned by US customers.