In a court filing on September 15, the Securities and Exchange Commission accused Binance.US of failing to cooperate in an investigation into whether the company’s staking, clearing, and brokerage services breach the federal securities law.
For the evidence-gathering process, known as discovery, the SEC said, “BAM has produced only approximately 220 documents, many of which relate to reporting otherwise required under the Consent Order, and many that consist of unintelligible screenshots and documents without dates or signatures.”
The document, which appears to be a partially unsealed version of one filed in August, further stated, “The limited discovery BAM has provided to date raises questions about whether defendants are in violation of the consent order,” which was referring to an earlier legal agreement to guarantee that only local U.S. staff have access to funds.
Federal U.S. regulators are concerned that the cryptocurrency exchange’s use of Ceffu, a custody service provided by Binance’s international division, violates a prior agreement meant to prevent assets from being hidden abroad. Also, the SEC is worried that it could influence other entities in Changpeng Zhao’s empire to control U.S. customer assets.
The SEC noted that BAM provided inconsistent information regarding the involvement of Ceffu and Binance in wallet management and customer funds. Binance.US said that creating wallets through the Ceffu software doesn’t give the company custody of or access to customer funds.
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