Millennial Money

SEC request court to take further action after reaching ‘impasse’ with Binance.US

The SEC filed a joint motion on March 5 requesting the court to take further action against Binance.US over allegedly failing to comply with regulatory requests for information on customer assets.

According to the filing, the SEC claims that Binance.US’s inspections have been insufficient, company counsel has refused to answer critical questions, and the firm has changed aspects of its operations without providing updates, among other issues.

Meanwhile, Binance.US claims in the joint filing that it has fully complied with all of the regulator’s information requests and argued that the SEC’s actions have caused the firm “material damage.”

The SEC first alleged that Binance and Binance.US committed securities violations in June 2023. Shortly after, the SEC obtained a temporary restraining order against Binance.US that required the exchange company to provide data and comply with orders.

SEC Concerns

The SEC is mainly concerned about whether entities outside of the US — including Binance Holdings Limited — control certain Binance.US crypto wallets.

The regulator’s concerns include a possible lack of complete autonomy in Binance.US’s control over customer assets — notably regarding the potential access of Binance Holdings employees to these funds via Amazon Web Services servers.

These servers support Binance.US’s wallet software, raising questions about the firm’s exclusive control over private keys and, thus, customer assets.

The SEC also raised concerns about whether Binance.US personnel exist outside the US and are compensated by global Binance entities. Additionally, the watchdog wants to confirm whether Binance.US properly monitored and blocked prohibited transfers to international entities connected to Binance.

The SEC has requested the court to engage in additional discovery, including a targeted deposition, which would require Binance.US to choose a representative to provide binding testimony. The agency also said it is open to other more limited discovery methods.

Material damage

According to the filing, Binance.US has simultaneously requested the court to end the expedited discovery process on the basis that it has fully complied with its demands.

The firm has also argued that the SEC’s actions have led to material damage as it resulted in the loss of banking partners and active users. The company added that these issues culminated in the decision to cut employees.

Binance.US COO Christopher Blodgett’s testimony revealed that the company has cut more than 200 staff — or two-thirds of the company — since June 2023 as users withdrew $1 billion in assets from the exchange.

Blodgett wrote that Binance.US revenues “imploded” after the SEC actions, declining more than 75% amid a backdrop of rising operating and legal costs.

#SEC #request #court #action #reaching #impasse #Binance.US

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button