SEC Accuses Binance.US of Refusal to Cooperate with Investigation, Receives Approval to Unseal or Unredact Case Documents

UTC by Tolu Ajiboye · 3 min read
SEC Accuses Binance.US of Refusal to Cooperate with Investigation, Receives Approval to Unseal or Unredact Case Documents
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The SEC has received approval to unseal several documents to further its Binance.US investigation and accused the company of noncooperation.

The United States Securities and Exchange Commission (SEC) has accused BInance.US of refusing to fully cooperate with its ongoing investigation. According to the SEC, Binance.US is deliberately providing inadequate or unclear information as part of the investigation.

In a September 14 court filing, the SEC said BAM, Binance.US’ holding company, has only submitted 220 documents as part of the discovery process. The SEC added that most of the documents “consist of unintelligible screenshots and documents without dates or signatures.” In addition to submitting unclear information, the SEC said that BAM has only agreed to four witness depositions and has refused to provide more witnesses.

To further its case, the SEC received approval from the US District Court for the District of Columbia to unseal or unredact 18 sealed documents and 9 redacted documents. Magistrate Judge Zia Faruqui has issued an order for access to several documents, including 9 partially sealed or redacted documents comprising 117 pages. These documents include several emails, SEC court filings, and internal Binance.US documents.

The SEC believes that Binance.US is using Ceffu, formerly Binance Custody, to move user funds out of the US. This allegation violates an agreement between both parties expressly stating that the funds remain in the country. The agreement was necessary because the SEC was unsatisfied that BAM was in full control of user assets.

Binance.US Reeling from Effects of Ongoing Legal Battle with the SEC

Binance.US is not struggling to keep its head above water as it battles lawsuits from the SEC and the Commodity Futures Trading Commission (CFTC). According to a Binance.US spokesperson, Binance.US has fired 100 staff, about a third of the company’s workforce. Reportedly, CEO Brian Shroder has left the firm and has already been temporarily replaced by Norman Reed, the Chief Legal Officer. Another report also states that two top Binance.US executives have also left. They include Chief Risk Officer Sidney Majalya and Head of Legal Krishna Juvvadi.

In June, the SEC filed a lawsuit against Binance, accusing the company of violating securities laws. The Commission also accused Binance of misleading investors and regulators, as well as deliberately mishandling user funds. In addition, the SEC said Binance allowed Americans to conduct trades unprotected by flouting KYC regulations.

According to SEC Division of Enforcement Director Gurbir S. Grewal, Binance.US and its global CEO Changpeng “CZ” Zhao deliberately evaded rules and put customers at risk. Grewal asserted in a press release that both entities did this to maximize profits. Furthermore, the SEC stated that the company was “combining the functions of exchanges, brokers, dealers, and clearing agencies.”

At the time, Binance described the SEC’s allegation as “disappointing.” The exchange maintained that it was unfortunate the SEC decided on a lawsuit and abandoned all “good-faith discussions” both entities had. In addition, Binance maintained that the allegations stating that customer funds were exposed to risk were false. Binance stated that its “size and global name recognition” make it an easy target for regulators.

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