The U.S. Securities and Exchange Commission (SEC) has accused Binance of a “lack of transparency” during its investigation into the crypto exchange.
In a court filing dated Sept. 14, the U.S. Securities and Exchange Commission (SEC) alleged that Binance US’s holding company, BAM, has so far produced only 220 documents during the discovery process, including “unintelligible screenshots and documents without dates or signatures.”
The SEC filed a lawsuit against Binance on June 5, leveling 13 charges against the platform, including breaking U.S. securities laws, failing to restrict U.S. investors from accessing Binance.com, and operating as an unregistered exchange, broker, and clearing agency.
The SEC turns its gaze on Ceffu
In the court filing published yesterday, the SEC raised concerns about customer assets falling under the control of Ceffu, a wallet custody software service owned by the exchange’s international entity Binance Holdings Ltd.
According to a previous agreement, the assets were supposed to be “solely in BAM’s custody and ‘complete control’ in the United States,” and not shared with other Binance entities.
But the SEC argued that Ceffu appeared to have control of customer assets "through their role in the establishment of wallets and keys shards related to BAM Customer Crypto Assets," as well as their control of the Amazon Web Services environment hosting the wallet custody software and storing the keys for both BAM and customer assets. Moreover, the SEC indicated that BAM refused to provide sufficient information to demonstrate that the assets are not “at the mercy" of Binance Holdings Limited and Binance CEO Changpeng Zhao.
The SEC called out BAM for inconsistent remarks regarding Ceffu. Initially, the regulator said, BAM stated that the discovery was “unrelated to the current custody and control of Customer Assets,” but subsequently acknowledged that Ceffu was responsible for creating BAM’s new crypto asset cold wallets and new private and administrative keys.
In a previous filing, Binance had dismissed the regulator’s concerns over Ceffu as “much ado about nothing.”
The SEC also accused Binance US of having responded to its demands for relevant communications with “blanket objections,” and that it had refused to produce documents that it claimed did not exist, only for the SEC to acquire them from other sources.
Additionally, the filing said, BAM has consented to only four testimonies from witnesses they have independently deemed suitable.
Executives depart Binance US
These accusations by the SEC against Binance US come amid a wave of executive departures from the exchange.
Earlier this week, the Chief Risk Officer (CRO) and the Head of Legal resigned from Binance US, joining a long list of top Binance executives leaving the firm this year.
Decrypt has reached out to Binance US for comment and will update this article should the firm respond.