In an ongoing investigation, the U.S. Securities and Exchange Commission (SEC) has raised concerns about Binance.US, the U.S. subsidiary of Binance, stating that it has yet to receive satisfactory responses to critical inquiries regarding customer assets and other core aspects. A joint status report filed with the District Court in Washington, D.C., on March 5 indicated that BAM Trading Services, operating as Binance.US, was deemed "unable or unwilling" to address queries regarding client asset custody.
Seeking intervention from the court to accelerate the discovery process, the SEC asserted that it had encountered obstacles in obtaining necessary information from BAM. Attorneys representing the SEC emphasized the necessity of court intervention, citing an impasse between the SEC and BAM over crucial questions that BAM allegedly failed to address.
Among the contentious issues is whether employees at Binance's overseas subsidiaries maintained access to customer assets held by Binance.US. The SEC contended that Binance.US had not sufficiently demonstrated the absence of access to private keys or other means of accessing client assets, sparking concerns about potential mishandling.
In response, Binance.US refuted the SEC's allegations, asserting compliance with the regulator's requests, which it deemed "unusually broad." The exchange urged the court to halt the expedited discovery process, dismissing the SEC's claims regarding client assets as unfounded. Binance.US asserted its adherence to securities regulations, highlighting the production of numerous documents and collaboration in inspections related to asset custody practices.
The legal saga between Binance and regulatory authorities unfolded last June when the SEC filed a lawsuit against Binance, Binance.US, and the exchange's founder, Changpeng "CZ" Zhao, alleging the sale of unregistered securities and commingling of customer assets in another company controlled by Zhao. Subsequently, in November, Binance agreed to a $4.3 billion settlement with the U.S. Department of Justice, acknowledging violations of U.S. anti-money laundering and terrorist financing laws. As part of the settlement, Zhao pleaded guilty to money laundering charges and faces a potential 18-month prison sentence, with a criminal sentencing hearing scheduled for April 3.
