Binance.US Accused of Impeding SEC Investigation: What’s the Next Step?
The U.S. Securities and Exchange Commission (SEC) has set its sights on Binance.US, the American division of cryptocurrency giant Binance Holdings Ltd. A legal battle is brewing, with allegations of non-compliance with regulations and potential violations of U.S. securities laws.
This clash is part of a larger conflict involving the SEC, various Binance entities, and the company’s founder, Changpeng Zhao.
Under investigation, the SEC filed a lawsuit last year accusing Binance of numerous violations, including mishandling customer funds and offering unregistered securities. The main focus of the investigation is whether Binance employees outside the U.S. accessed assets belonging to American customers, which would be a breach of regulatory rules.
In a recent joint report to a Washington, D.C. District Court, the SEC claimed that Binance.US, operating as BAM Trading Services, failed to provide essential information regarding the custody of customer assets. The SEC alleges that despite a court order, Binance.US has been either unable or unwilling to demonstrate control over these assets.
Binance.US has countered the SEC’s claims by asserting that they have cooperated with document requests and provided evidence to support their control over customer assets. However, the SEC remains unsatisfied, accusing Binance.US of a lack of transparency and an unwillingness to address important inquiries.
This regulatory standoff comes at a time when the cryptocurrency market is booming, highlighting the challenges faced by major exchanges. Binance.US’s perceived failure to address regulatory concerns raises concerns about investor protection and the integrity of the market.
In the aftermath of the SEC’s actions, Binance.US COO Christopher Blodgett testified about significant staff reductions and a substantial $1 billion in asset withdrawals since June 2023. Revenues have plummeted by over 75% amidst rising costs.
With Binance.US facing scrutiny, the safety of other cryptocurrency exchanges comes into question.