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