- Binance CEO Changpeng “CZ” Zhao rejects Binance.US’ use of Ceffu.
- The stance of the executive contradicts statements from Binance.US’ lawyers.
- Zhao’s error has raised further concerns about the exchange.
As the SEC case against Binance gathers momentum, the major contention has been the safety of Binance.US customer assets. Early in the case, the agency expressed concern that Binance routinely mishandled customer deposits, allegedly sending them to entities controlled by Binance CEO Changpeng “CZ” Zhao.
While it did not take long for Binance and the SEC to reach an agreement to keep U.S. customer deposits in the U.S. and away from Binance-affiliated entities, the regulator, in recent filings, has accused Binance.US of breaching the deal by using a custody service provided by Binance: Ceffu, formerly known as Binance Custody.
As the tussle heats up, Binance’s Zhao has come out to push back against the SEC’s claims in an apparent gaffe.
Zhao: ‘Binance.US Never Used Ceffu’
In a Twitter post on Tuesday, September 19, Binance’s Zhao asserted that his exchange’s U.S. affiliate has never used Ceffu.
"For the record. Binance US does not use, and have NEVER used Ceffu or Binance Custody," he contended.
According to the Binance chief, any claims to the contrary were false. However, his statements contradict statements from Binance.US’ lawyers.
An Apparent Error?
Unlike Zhao, in court filings on September 12, Binance.US lawyers conceded to using Ceffu’s custody service. However, they contend that Binance.US had sole control over wallet keys and, as such, customer assets in line with the consent order agreement. At the same time, they argue that when the consent order was signed, it was understood that Binance.US would still be allowed to use the Binance-provided service.
In light of these concessions from Binance.US lawyers, crypto community members have quickly pointed out the Binance chief’s error. Cinneamhain Ventures partner Adam Cochran, who has built a reputation as a staunch Binance critic in recent months, asserted that customers of the exchange could not trust the CEO to be honest about the safety of customer deposits if he could “lie” about facts in the case.
These contentions come as the SEC, stressing its concern over the safety of customer deposits, claimed that Binance.US’ auditor had experienced difficulty proving that the firm was fully collateralized at certain times in unsealed court filings dated September 15.
Despite these concerns, Judge Zia Faruqui of the U.S. District Court for the District of Columbia refrained from ruling in favor of the SEC’s request for expedited discovery or Binance’s opposition to this request in a Monday, September 18 hearing. Instead, Judge Faruqui has called for calm in the case, urging both parties to work together to achieve a compromise.
On the Flipside
- Binance intends to seek dismissal of the SEC case.
Why This Matters
Binance.US asset custody has emerged as a critical contention in Binance’s battle with the SEC. The error by Binance’s Zhao raises questions about his knowledge of the operations of the crypto giant.
Read this to learn more about recent concerns surrounding Binance:
Binance Under Fire: Auditor Doubts Over Reserves Rattle Community
Learn more about Canto’s move to Polygon:
Polygon 2.0: Canto to Launch Polygon-Powered RWA Focused Chain