The SEC expresses dissatisfaction with the extent of cooperation it has received from Binance.US in relation to their investigation. Moreover, according to the SEC, Binance.US has furnished only 220 documents, which notably falls well short of the regulator’s requirements.
Furthermore, the SEC has made specific requests for information regarding customer assets. However, BAM, the company behind Binance.US, has not yet complied with these demands.
This issue’s origin dates back to June when BAM agreed to furnish information regarding the custody, security, and accessibility of U.S. customer assets. This agreement followed the SEC’s lawsuit against the exchange for numerous violations of federal securities laws. However, in the most recent court filing, it’s evident that BAM’s compliance has been subpar.
According to the SEC, as of the date of this filing, BAM has only produced slightly over 220 documents. Furthermore, many of these documents are challenging to interpret. They consist of unclear screenshots of bank account information, as well as documents lacking dates or signatures. Additionally, there is correspondence from legal counsel.
Additionally, there are tables that appear to have been prepared solely for this litigation. However, they lack supporting evidence or validation by a knowledgeable individual to confirm their accuracy.
SEC Expresses Dissatisfaction in Binance Investigation and Information Disclosure
The SEC’s lawsuit against Binance, including its founder Chanpeng ‘CZ’ Zhao, stems from allegations of misrepresenting the oversight of the Binance.US platform, among other charges.
One specific area of contention was BAM’s initial reluctance to provide information about Ceffu. The SEC has identified Ceffu as a “newly rebranded Binance Entity” potentially responsible for controlling customer assets.
At first, BAM regarded Ceffu-related discovery as ‘non-priority,’ asserting it was unrelated to the present custody and control of customer assets. However, during a July 7 meeting, the SEC underscored the necessity of this discovery. Following this, BAM agreed to prioritize it.
The SEC is now urging the court to compel BAM to adhere to the consent order. This pertains specifically to Ceffu, certain communications related to customer assets, and financial information. According to the SEC, BAM has either refused or failed to provide essential documents.
These include general ledgers for the end of the second quarter in 2023, bank account opening records, and documents demonstrating authorized signatories on the accounts.
Moreover, these documents hold significant importance as they are crucial for verifying BAM’s assertions regarding the safety, security, proper segregation, and immediate withdrawal readiness of customer assets as well as BAM’s assets.
In response to this situation, Binance took action by filing a motion. They requested a protective order against the SEC. Binance asserts that they have already provided ample information to the SEC. Hence, they argue that the SEC’s stance is unreasonable.
Binance contends that this is part of a larger pattern they allege the SEC is engaged in. This pattern involves the purported misuse of the discovery provision as outlined in the Consent Order.
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