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Home BUSINESS

‘House of Mirrors’: SEC Demands Urgent Inspection of Binance US Assets

BlockNews Team by BlockNews Team
September 25, 2023
in BUSINESS, CRYPTO, POLITICS
Reading Time: 3 mins read
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The SEC likened its investigation into Binance US to ‘navigating a house of mirrors’ as it accused the exchange of non-cooperation in its pursuit of regulatory oversight.

  • SEC intensifies legal battle with Binance US over cooperation and asset custody.
  • Recent executive departures heighten the urgency of the dispute.
  • September 18 court hearing pivotal for cryptocurrency exchange regulation.

The SEC has accused Binance US of non-cooperation and compared its investigation to “navigating a house of mirrors.” This marks a significant escalation in the clash between the regulator and the cryptocurrency exchange.

The SEC’s Allegations

The SEC’s latest move follows its lawsuit against Binance, Binance US, and Binance CEO Changpeng “CZ” Zhao in June, alleging violations of securities laws. The regulatory authority has since been pushing for expedited discovery, seeking access to internal documents that shed light on the inner workings of the exchange, particularly who has control over customer assets. Initially, Binance US agreed to cooperate but later reneged, citing “unreasonable demands” from the SEC for such documents.

Earlier this month, the SEC criticized Binance for its “lack of transparency” during the investigation. Now, ahead of a court hearing, the SEC contends that Binance US has obstructed their efforts, claiming the exchange has “stonewalled on entire categories of information” crucial to understanding the custody and control of customer assets. The recent departure of top executives from Binance US, including its CEO, has only heightened the urgency of expedited discovery.

The Urgent Need for Expedited Discovery

In its court documents, the SEC emphasized the urgency of the situation, stating, “The accelerating mass exodus of BAM employees, now including its CEO and others who may possess crucial information regarding the custody, control, and availability of assets, further underscores the urgent need for expedited discovery into these issues now.” BAM refers to BAM Trading Services Inc., which operates Binance US.

The SEC argues that Binance US has provided only a limited amount of information regarding Binance’s custody platform, Ceffu, which the SEC alleges is used to hold assets on Binance US. This lack of transparency concerning custody arrangements raises concerns about the security and safety of customer assets.

Binance’s Defense

Binance has consistently maintained that Binance US is an independent entity, operating separately from its parent company. This assertion has been a central point of contention in the legal dispute. Binance US has argued that the SEC’s demands infringe upon its autonomy as a U.S.-based cryptocurrency exchange.

The Upcoming Court Hearing

The ongoing legal battle between Binance US and the SEC is set to continue with a court hearing scheduled for September 18. At 3 p.m. ET on that day, both parties will present their arguments and evidence before the court.

Conclusion

The SEC’s demands for expedited discovery in its investigation into Binance US have intensified the conflict between the regulatory authority and the cryptocurrency exchange. The SEC alleges that Binance US has obstructed its efforts to gain access to vital information regarding the custody and control of customer assets, and recent executive departures have heightened the urgency of the situation.

As the legal battle unfolds, the cryptocurrency industry watches closely, as the outcome could have significant implications for the regulatory oversight of cryptocurrency exchanges in the United States. The hearing on September 18 will be a crucial turning point in this ongoing saga, shedding light on the extent of regulatory authority over cryptocurrency exchanges operating in the U.S. and the responsibilities they bear in safeguarding customer assets.

Disclaimer: BlockNews provides independent reporting on crypto, blockchain, and digital finance. All content is for informational purposes only and does not constitute financial advice. Readers should do their own research before making investment decisions. Some articles may use AI tools to assist in drafting, but every piece is reviewed and edited by our editorial team of experienced crypto writers and analysts before publication.
Tags: Binance.USHouse of Mirrorssec
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