SEC claims Binance.US ‘unwilling’ to give info, requests court intervenes

Binance.US isn’t answering important questions, the SEC claims, but the crypto exchange says further requests exceeded the regulator’s bounds.

Binance’s United States arm, Binance.US, hasn’t been providing answers to key questions relating to customer assets and other core elements of an ongoing investigation, the U.S. Securities and Exchange Commission claims.

BAM Trading Services — doing business as Binance.US — has been “unable or unwilling” to answer requests for information concerning the custody of customer assets, the SEC alleged in a March 5 joint status report to a Washington, D.C. District Court.

It asked the court to intervene to speed up the discovery process.

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The SEC claimed Binance.US has failed to produce enough information for the regulator’s investigation. Source: CourtListener


“The SEC believes it is at an impasse with BAM as to certain key questions that BAM has been unable or unwilling to answer, and thus, the Court’s intervention is warranted,” wrote the SEC’s lawyers.

“Among other things, BAM refused to comply with basic discovery obligations, such as producing attachments and metadata associated with responsive documents or providing written responses.”

Central to the SEC’s investigation is whether employees of the non-U.S. arm of Binance maintained access to Binance.US customer assets. The SEC claimed Binance.US has failed to prove that it didn’t have access to private keys or other forms of access to customer assets.

In the report, Binance.US pushed back on the SEC’s allegations saying it had complied with all of the regulator’s “exceptionally broad” requests for information and asked the court to end the expedited discovery process.

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Binance.US’ position in the report pushed back on the SEC’s claims. Source: CourtListener

The exchange said the SEC’s claims concerning customer assets were “unfounded” and added it had gone “above and beyond its obligations” to the securities watchdog.

Binance.US added it had produced thousands of documents concerning “every conceivable aspect of its asset custody practices,” including declarations under oath, monthly reports and facilitated several inspections of shared custody devices involving customer assets.

The SEC sued Binance, Binance.US, and the exchange’s founder and former CEO Changpeng “CZ” Zhao in June last year, alleging they had sold unregistered securities and commingled customer assets in a separate firm Zhao controlled.

On Nov. 21, Binance reached a $4.3 billion settlement with the U.S. Department of Justice, admitting to violating U.S. money laundering and terrorism financing laws.

As part of the settlement, Zhao pleaded guilty to money laundering charges and faces his criminal sentencing hearing on April 3, where he could face up to 18 months in prison.

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