Today marked a pivotal moment in the ongoing legal tussle between the U.S. Securities and Exchange Commission (SEC) and Binance US, with the SEC approaching a court to dismiss the latter’s recent objections concerning a legal motion initiated by the regulatory body.
As per CoinDesk’s report, the SEC underscored potential issues in establishing that Binance US was fully collateralized, unearthed during a recent audit of the company. This allegation has been robustly contested by Binance US, which asserts that the SEC is venturing beyond its legal purview.
JUST IN: 🇺🇸 SEC says Binance US audit found it "very difficult to ensure the company was fully collateralized."
— Watcher.Guru (@WatcherGuru) September 18, 2023
Binance US and SEC: Unpacking the Points of Dispute
In its defense, Binance US maintains that the requests made by the SEC are expansive and transcend its official boundaries, including solicitations for data and documents that are not under its custody and are more pertinent for other involved parties.
Today’s court documents featured Binance US refuting the SEC’s demands, articulating that they are “vague, ambiguous, overbroad, and lack specificity, amounting to an oppressive call for information or documents that exceed the relevant scope necessary for the Consent Order.” The firm emphasized that complying with such demands would impose considerable financial and logistical strains.
.@binance's U.S. entity, @BinanceUS, has once again rebuffed the SEC's requests for documents related to its business operations, a Monday court filing shows.@LizKNapolitano reportshttps://t.co/xhd7NiRGs2
— CoinDesk (@CoinDesk) September 18, 2023
This legal clash commenced in June when the SEC launched a lawsuit against Binance, implicating its global parent entity, Binance Holdings, and the founder, Changpeng “CZ” Zhao, alleging the facilitation of an unauthorized securities exchange.
SEC’s Scrutiny Over Asset Management Practices
The SEC is intensifying its scrutiny of Binance US’s asset handling protocols, urging the court to overlook the company’s objections regarding their request for detailed documentation and correspondence from the exchange. They have not shied away from denouncing the company’s asset safeguarding protocols as “unstable.”
In a recent legal motion, the SEC urged a D.C. court to authorize a meticulous examination of Binance US, highlighting the company’s failure to submit essential documents for the ongoing legal procedures, thus accentuating the pressing need for a comprehensive inquiry.
Is the Safety of Binance US Compromised?
Questions are mounting over the integrity of Ceffu, a facility that underwent rebranding from Binance Custody earlier this year. The SEC harbors apprehensions that Ceffu might be instrumental in channeling U.S. customer funds abroad, contradicting previous agreements.
The SEC’s filing stipulates a plea for “an order urging BAM to disclose documents and correspondences regarding any entities offering it wallet custody software and associated services.”
Furthermore, the SEC accused Binance US of delivering “inconsistent statements about critical details, dragging its feet in the small-scale release of documents and data, and resisting divulging entire sectors of information that could potentially illuminate its unstable claims concerning customer asset protection.” The regulatory body painted Zhao as a figure who perceives himself as immune to any court’s jurisdiction.
As the SEC seeks to obligate Binance US to yield necessary depositions, messages, and other pertinent data for examination, non-compliance might trigger sanctions against the crypto trading platform. This escalation further amplifies the discussion surrounding the necessity of stringent regulations in the burgeoning cryptocurrency sector.
The current standoff between the SEC and Binance US is symptomatic of larger issues regarding the required extent of regulatory surveillance in the fast-evolving cryptocurrency domain.
