The U.S. Securities and Exchange Commission (SEC) has raised concerns about Binance.US’s alleged failure to provide satisfactory responses regarding the custody of customer assets and other crucial aspects of an ongoing investigation.
In a joint status report submitted to a Washington, D.C. District Court on March 5, the SEC stated that BAM Trading Services, operating as Binance.US, has not adequately responded to inquiries, prompting the regulatory body to seek the court’s assistance in expediting the discovery process.
Key issues in the investigation revolve around whether employees of Binance’s non-U.S. arm had access to Binance.US customer assets, a matter to which Binance.US has allegedly not responded adequately, according to the SEC.
Binance.US, however, refutes these claims, asserting that it has complied with all requests for information, albeit describing them as excessively broad. The company contends that the allegations concerning customer assets are unfounded and asserts that it has exceeded its obligations by providing thousands of documents related to asset custody practices, along with declarations under oath and monthly reports.
Moreover, Binance.US highlights its cooperation with inspections involving shared custody devices containing customer assets.
In light of the SEC’s investigation, Binance.US has urged the court to conclude the expedited discovery process, citing full compliance with regulatory demands. The company also expressed concerns about the adverse impacts of the SEC’s actions, including the loss of banking partners and a decline in active users, leading to significant operational changes and workforce reductions.
The legal dispute with the SEC is part of a broader challenge against Binance, Binance.US, and their founder Changpeng Zhao, initiated in June 2023. The lawsuit alleges the sale of unregistered securities and commingling of customer assets with those of a separate entity controlled by Zhao.
Separately, Binance reached a settlement with the U.S. Department of Justice in November 2023, agreeing to pay $4.3 billion over violations of anti-money laundering laws. Zhao pleaded guilty to money laundering charges as part of the settlement and faces sentencing on April 3.
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