Binance.US Under Regulatory Spotlight as SEC Flags Compliance and Custody Concerns

by Nik Asti

Published: September 15, 2023 at 4:06 am Updated: September 15, 2023 at 6:15 am

by Victor Dey

Edited and fact-checked: September 15, 2023 at 4:06 am

In Brief

The SEC claims that Binance.US is breaching a prior agreement by using a custody service from its international division.

Binance.US argues that assets are secure and accuses the regulators of undertaking a pointless investigation.

The U.S. Securities and Exchange Commission (SEC) has raised serious concerns about Binance.US compliance with federal laws and the integrity of its custody service, Ceffu.

In a court filing unsealed last Thursday, the SEC accused Binance.US of not cooperating sufficiently in an ongoing investigation. According to the regulatory body, the crypto exchange’s staking, clearing, and brokerage services are in violation of federal securities laws.

Binance.US has downplayed the SEC’s concerns, describing them as a “futile fishing expedition.” The exchange insists that assets are secure and accuses regulators of being overly aggressive.

They argue that the mere act of creating wallets as a provider of Ceffu software doesn’t give their international arm direct access to or control over customer assets.

Binance fine guys??#BinanceUS #Binance pic.twitter.com/eu6GaIm67D
— Bit Explorer 🌟 (@bit_explor30429) September 15, 2023

Concerns Over Limited Discovery

SEC has taken issue with the limited discovery provided by Binance.US’ holding company, BAM. Of the approximately 220 documents submitted, many were allegedly unintelligible screenshots or lacked dates and signatures.

Caught in the crosshairs of multiple regulatory bodies, including the Commodity Futures Trading Commission (CFTC), Binance.US has taken drastic measures. The exchange announced a one-third reduction in its workforce this week. Notably, the departures include high-ranking officials like CEO Brian Shroder, the head of legal, and the chief risk officer.

The scrutiny of exchange by the SEC comes at a critical time for the crypto industry. As the situation unfolds, the key question will be whether Exchange can meet the SEC’s expectations for compliance, particularly in areas like asset custody and securities laws.

While Binance.US contends that the SEC’s actions are much ado about nothing, the regulatory watchdog seems far from convinced. And as both sides dig in, the ultimate outcome remains uncertain, casting a shadow over the crypto exchange’s operations in the U.S.

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About The Author

Nik is an accomplished analyst and writer at Metaverse Post, specializing in delivering cutting-edge insights into the fast-paced world of technology, with a particular emphasis on AI/ML, XR, VR, on-chain analytics, and blockchain development. His articles engage and inform a diverse audience, helping them stay ahead of the technological curve. Possessing a Master's degree in Economics and Management, Nik has a solid grasp of the nuances of the business world and its intersection with emergent technologies.

Nik Asti