Binance’s Cooperation Leaves Much to be Desired
According to the SEC, Binance US’s operator, BAM, had agreed to an expedited discovery process but failed to adequately fulfill this agreement. Of the approximately 220 documents submitted by BAM, many were identified as being unintelligible screenshots or incomplete documents lacking dates or signatures. In addition to this, the company has refused to offer crucial witnesses for deposition, choosing to provide only four depositions of witnesses it had personally selected.
BAM’s Approach Creates Hurdles for The Investigation
The SEC attorneys expressed concerns regarding BAM’s non-cooperative stance, claiming that the entity responded to requests for relevant information with blanket objections and denied the existence of certain documents typically maintained in the ordinary course of business. These documents, however, later surfaced from other sources. Binance.US did not immediately respond to these allegations.
SEC’s Concerns Over Binance’s Use of Ceffu
In addition to the document access issues, the SEC also raised concerns about Binance.US’s use of Ceffu, a custody service provided by Binance affiliate. The agency claimed it observed inconsistencies in BAM’s statements regarding the roles of Ceffu and Binance in the management of wallets and customer funds. The SEC alleges that BAM may have violated a Consent Order by entrusting a Binance Entity with its crypto assets against the agreement’s terms.
The Aftermath of the SEC’s Allegations
Following the SEC’s allegations, Binance has faced increasing internal turmoil. Several Binance.US executives, including CEO Brian Shroder, head of legal Krishna Juvvadi, and chief risk officer Sidney Majalya, have recently left the company amidst two rounds of layoffs. As these events unfold, the SEC continues to press its case against Binance with 13 charges, including claims of operating unregistered exchanges and problems related to the Binance.US affiliate.
Key Points
What is the SEC’s issue with Binance?
The SEC has accused Binance of not providing sufficient cooperation during an ongoing investigation, especially during the document discovery phase of the process.
What inconsistencies has the SEC noted in Binance’s conduct?
The SEC has noted inconsistencies in Binance’s statements regarding the roles of Ceffu and Binance in the management of wallets and customer funds, raising concerns about potential Consent Order violation.
What has been the impact of the SEC’s allegations on Binance?
The allegations have led to internal turmoil within Binance, with several key executives departing the company amidst two rounds of layoffs.
