Binance CEO Denies Allegations of Using Custody Unit Linked to Parent Company
Changpeng Zhao, CEO of Binance, has refuted claims made by the Securities and Exchange Commission (SEC) that Binance.US utilizes a custody unit that may be connected to its parent company, potentially exposing clients to a foreign entity. In a tweet, Zhao stated that Binance US has never used Ceffu or Binance Custody, dismissing the allegations as baseless.
The SEC has been requesting further information from BAM, the company behind Binance.US, regarding the handling of customer assets. The regulator specifically wants more details about Ceffu, which it believes controls customer assets and is affiliated with Binance. The SEC also highlighted that BAM is prohibited from using a foreign third-party for wallet custody services.
BAM has been inconsistent in its statements about the involvement of Ceffu and Binance, according to an SEC lawyer. In a recent court filing, BAM explained that it relies on wallet custody software developed by Binance Holdings Limited, which it referred to as “Ceffu” in correspondence with the SEC due to confusion over terminology.
Judge Encourages Collaboration Between SEC and BAM
During a hearing on Monday, a judge urged the SEC and BAM to work together and find common ground. The SEC filed a lawsuit against Binance.US and Changpeng Zhao in June, accusing them of violating federal securities laws by misrepresenting the oversight of the platform. A joint status report is expected to be filed by October 10 ahead of an October 12 hearing.
Hot Take: Binance CEO Pushes Back Against SEC Allegations
Binance CEO Changpeng Zhao has strongly denied allegations made by the SEC regarding the use of a custody unit linked to its parent company. Zhao took to Twitter to dismiss the claims, stating that Binance US has never used Ceffu or Binance Custody. The SEC has been seeking more information from BAM, the company behind Binance.US, regarding customer asset handling. The regulator specifically wants details about Ceffu, which it believes controls customer assets. A judge has encouraged collaboration between the SEC and BAM to resolve the dispute.
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