The U.S. Securities and Exchange Commission (SEC) has raised concerns over Binance.US’s lack of response to critical inquiries regarding customer assets in an active investigation. In a joint status report to a Washington, D.C. District Court on March 5, the SEC stated that BAM Trading Services, operating as Binance.US, has not provided satisfactory responses regarding the custody of customer assets, prompting the regulatory body to seek the court’s assistance in expediting the discovery process.

The SEC alleges that Binance.US has not fully complied with basic discovery obligations, such as producing necessary attachments and metadata related to requested documents. A key focus of the investigation is whether Binance’s non-U.S. arm employees had access to Binance.US customer assets, to which Binance.US has not adequately responded, according to the SEC.

However, Binance.US refutes these allegations, claiming to have adhered to all information requests, albeit describing them as “exceptionally broad.” The company asserts that the allegations regarding customer assets are unfounded and emphasizes its cooperation with various inspections of shared custody devices involving customer assets.

In light of the SEC’s investigation, Binance.US has urged the court to conclude the expedited discovery process, citing full compliance with the regulator’s demands. The company has also expressed concerns over the tangible impacts of the SEC’s actions, including the loss of banking partners and a decrease in active users, leading to significant operational changes, including the termination of over 200 employees since June 2023.

Binance.US COO Christopher Blodgett attributed these staff cuts to a substantial decline in revenue and increased operational and legal costs following the SEC’s actions. This legal dispute is part of a broader challenge against Binance, Binance.US, and their founder Changpeng Zhao, initiated by the SEC in June 2023, accusing them of selling unregistered securities and commingling customer assets with those of a separate entity controlled by Zhao.

In a separate legal matter, Binance reached a settlement with the U.S. Department of Justice, agreeing to pay $4.3 billion over violations of U.S. anti-money laundering and terrorism financing laws. Zhao pleaded guilty to money laundering charges and is awaiting sentencing on April 3, potentially facing up to 18 months in prison.

For more news and updates on cryptocurrency-related investigations, stay tuned to Global Crypto News.

Post Views: 4