The United States Securities and Exchange Commission (SEC) has raised allegations of non-cooperation against Binance.US, the cryptocurrency exchange, in the midst of an ongoing investigation. According to a court filing dated September 14, the SEC expressed its concerns regarding Binance.US’s handling of the discovery process.
The SEC’s court filing highlighted that Binance.US’s holding company, known as BAM, has produced a mere 220 documents during the discovery process. Furthermore, a significant portion of these submitted documents, as per the Consent Order, were described as “unintelligible screenshots and documents without dates or signatures.”
The SEC also accused BAM of refusing to produce essential witnesses for deposition, instead agreeing to only four depositions of witnesses it independently deemed appropriate. The regulatory body criticized BAM for responding to requests for relevant communications with blanket objections and for refusing to provide documents typically kept as part of its ordinary business operations, later claiming that such documents did not exist, despite the SEC subsequently receiving them from other sources.
Moreover, the SEC expressed concerns about Binance.US’s use of Ceffu, wallet custody software provided by Binance Holdings Ltd., the global entity connected to Binance.US. BAM initially claimed that Ceffu was its wallet custody software and services provider but later contradicted itself by stating that Binance fulfilled this role. This inconsistency raised alarms within the SEC, which suggested that Binance.US’s utilization of Ceffu may breach a prior agreement designed to prevent the diversion of funds abroad.
The SEC had filed a lawsuit against Binance on June 5, leveling 13 charges against the crypto exchange, including unregistered securities offerings, Simple Earn and BNB Vault products, and its staking program. The regulatory body argued that Binance.com, Binance.US, and BAM Trading should have registered as clearing agencies, broker-dealers, and exchanges, respectively. The sale of Binance.US’ unregistered staking-as-a-service program also mandated BAM Trading to register as a broker-dealer.
These fresh allegations by the SEC come amid an internal crisis at Binance.US. CEO Brian Shroder is the latest in a series of top Binance executives to leave the firm this year. This departure has been accompanied by the resignations of the head of legal and the exchange’s chief risk officer within days of each other. Binance.US has not provided immediate comments in response to these allegations.