Binance.US Accused of Failing to Assist in Investigation

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  • The US Securities and Commission Exchange (SEC) has asked for intervention in its case against Binance.US
  • The SEC claims that Binance has not been open with its systems and operations
  • The agency also wants the judge to order former Binance CEO Changepeng Zhao to be deposed

Binance.US has been accused of not complying with a US Securities and Exchange  Commission (SEC) investigation into its affairs. The US wing of the company was charged in the same June 2023 filing that saw Binance’s parent company, referred to as BAM, forking out $4.3 billion last November, with the SEC wanting the entity to be shut down. In the latest joint report, the SEC has accused Binance of being “unable or unwilling to answer” a raft of key questions and has asked for the court’s intervention on the matter.

Binance Provided “Choreographed Tour” of its Systems

According to the filing, BAM carried out an inspection of its software and infrastructure pertaining to Customer Assets in January, which the SEC contested due to its restricted scope and lack of transparency. Despite multiple discussions on the inspection’s scope and process, BAM only allowed a “mostly choreographed tour of certain relevant software and infrastructure.”

The SEC says that its request to review various components of BAM’s software was denied, and crucial questions relating to core issues under the Consent Order were left unanswered, with the company’s reluctance to provide insights into its system’s interaction with wallet software and private keys, as well as its refusal to demonstrate the “whitelisting” process for wallet transfers, raising concerns about compliance.

SEC Wants Zhao to be Deposed

Subsequent correspondence between BAM and the SEC highlighted ongoing disagreements over discovery obligations and the adequacy of BAM’s compliance with the Consent Order. Despite the SEC’s concerns and requests for further information, BAM has asserted its compliance with its obligations under the Consent Order.

As a result of BAM’s apparent intransigence, the SEC has asked the judge to force the company to answer its questions and provide the requested access and information, while also seeking to make headway over the planned deposition of former Binance CEO Changpeng Zhao, noting that Zhao had “objected to this request based on the SEC’s failure to provide a credible basis” for doing so.