Binance.US Under Regulatory Spotlight as SEC Flags Compliance and Custody Concerns
The SEC claims that Binance.US is breaching a prior agreement by using a custody service from its international division.
Binance.US argues that assets are secure and accuses the regulators of undertaking a pointless investigation.
In a court filing unsealed last Thursday, the SEC accused Binance.US of not cooperating sufficiently in an ongoing investigation. According to the regulatory body, the crypto exchange’s staking, clearing, and brokerage services are in violation of federal securities laws.
Binance.US has downplayed the SEC’s concerns, describing them as a “futile fishing expedition.” The exchange insists that assets are secure and accuses regulators of being overly aggressive.
They argue that the mere act of creating wallets as a provider of Ceffu software doesn’t give their international arm direct access to or control over customer assets.
Concerns Over Limited Discovery
SEC has taken issue with the limited discovery provided by Binance.US’ holding company, BAM. Of the approximately 220 documents submitted, many were allegedly unintelligible screenshots or lacked dates and signatures.
Caught in the crosshairs of multiple regulatory bodies, including the Commodity Futures Trading Commission (CFTC), Binance.US has taken drastic measures. The exchange announced a one-third reduction in its workforce this week. Notably, the departures include high-ranking officials like CEO Brian Shroder, the head of legal, and the chief risk officer.
The scrutiny of exchange by the SEC comes at a critical time for the crypto industry. As the situation unfolds, the key question will be whether Exchange can meet the SEC’s expectations for compliance, particularly in areas like asset custody and securities laws.
While Binance.US contends that the SEC’s actions are much ado about nothing, the regulatory watchdog seems far from convinced. And as both sides dig in, the ultimate outcome remains uncertain, casting a shadow over the crypto exchange’s operations in the U.S.
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