Binance.US Under Fire: SEC Questions Compliance with Custody Deal

The SEC turns its investigative eye to Binance.US, raising concerns about the platform’s adherence to a custody agreement.

Gary Gensler interrogating somebody in a dark and smoke filled room.
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  • SEC raises concerns over Binance.US’s compliance with a custody deal.
  • The probe could have broader implications for the crypto industry.
  • Binance faces a series of legal challenges in multiple countries. 

Binance’s legal battle with the Securities and Exchange Commission (SEC) continues to unfold with more controversy. Most recently, the SEC has questioned the exchange’s compliance with a custody deal with the courts. Specifically, the agency is concerned that Binance could use technology to transfer its funds overseas, out of the reach of US authorities. 

Binance.US and the Custody Deal Controversy

On Thursday, September 14, the SEC filed a memorandum against Binance for its alleged violations of prior agreements. The SEC claims that Binance.US has relied on a custody provider from its international arm, Ceffu. 

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This move, the SEC contends, violates the agreement between Binance and the courts. Moreover, the agency claims that using Ceffu would enable Binance to transfer its money overseas. 

Moreover, Binance.US’s holding company, BAM, reportedly provided limited and unclear documentation during the discovery process. This, claims the SEC, further raises concerns over asset custody.

Binance Responds: ‘Much Ado About Nothing’

The SEC’s apprehensions extend to Binance.US’s use of Ceffu, a wallet custody software from Binance Holdings Ltd. The agency claims this arrangement might give entities connected to Binance access to U.S. customer assets. 

Binance countered these claims. In a filing from September 14, the exchange labeled the SEC’s worries about Ceffu as “much ado about nothing.” They further clarified that merely creating wallets via the Ceffu software doesn’t grant the international arm access or custody over customer funds.

On the Flipside

  • Binance faces legal troubles on all fronts. For one, the exchange is also targeted in a lawsuit by the US Commodity Futures Trading Commission.
  • Other countries are also investigating Binance for a range of legal issues. This includes France, which launched an investigation against Binance for money laundering

Why This Matters

The regulatory scrutiny of major exchanges like Binance not only impacts the trust and credibility of the platform. It also shapes the broader regulatory environment for cryptocurrencies.

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Read more about the latest developments in the Binance-SEC lawsuit:
Binance.US Condemns SEC’s “Overboard” Deposition Request

Read more about Visa’s take on Solana:
Visa Lauds Solana’s High Speeds and Low Fees in Deep Dive

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

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David Marsanic

David Marsanic is a journalist for DailyCoin who covers the intersection of crypto, traditional finance, and government. He focuses on institutionalized crypto entities like major cryptocurrency exchanges and Solana, breaking down complex topics into easy-to-understand writing. David's prior experience as a business journalist at various crypto and traditional news sites has enabled him to maintain a critical approach to news while adhering to high journalistic integrity standards.