The SEC Alleges Binance.US is Noncompliant in Investigation
The U.S. Securities and Exchange Commission (SEC) has accused Binance.US of failing to cooperate with an ongoing investigation. In a joint status report submitted to a Washington, D.C. District Court on March 5, the SEC expressed concerns about Binance.US’s lack of response regarding customer assets and other critical aspects of the investigation. The regulatory body has requested the court’s assistance in expediting the discovery process.
The SEC alleges that Binance.US has been reluctant or unable to fulfill basic discovery obligations, such as providing necessary attachments and metadata related to requested documents. The main focus of the investigation is whether employees from Binance’s non-U.S. arm had access to Binance.US customer assets, a question that the SEC claims Binance.US has not adequately answered.
However, Binance.US denies these allegations and asserts that it has complied with all information requests. The company argues that the SEC’s demands were excessively broad and baseless. It claims to have gone above and beyond its obligations by providing thousands of documents related to its asset custody practices, including sworn declarations and monthly reports.
Binance.US Requests Conclusion of Discovery Process
In response to the SEC’s ongoing investigation, Binance.US has asked the court to conclude the expedited discovery process, citing full compliance with the regulator’s demands. The company also expressed concerns about the negative impact of the SEC’s actions, including the loss of banking partners and a decrease in active users.
These challenges have forced Binance.US to make significant operational changes, resulting in the termination of over 200 employees since June 2023. The company’s COO, Christopher Blodgett, attributed these staff cuts to a decline in revenue and increased operational and legal costs following the SEC’s actions.
Broader Legal Challenges Against Binance
This dispute is part of a larger legal battle involving Binance, Binance.US, and their founder and former CEO Changpeng Zhao. In June 2023, the SEC filed a lawsuit against them, 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 on November 21. The company agreed to pay $4.3 billion for violating U.S. anti-money laundering and terrorism financing laws. As part of the settlement, Zhao pleaded guilty to money laundering charges and is awaiting sentencing on April 3, potentially facing up to 18 months in prison.
Hot Take: Binance.US Faces SEC Scrutiny Amidst Legal Challenges
Binance.US finds itself in hot water as the SEC accuses it of noncompliance in an ongoing investigation. The regulatory body has raised concerns about the company’s failure to respond adequately to inquiries regarding customer assets and other crucial aspects of the probe. Despite Binance.US’s claims of cooperation, the SEC alleges that the company has not fulfilled its basic discovery obligations.
The consequences of this dispute are significant for Binance.US. The company is grappling with the loss of banking partners and a decline in active users due to the SEC’s actions. These challenges have forced Binance.US to make tough decisions, including laying off a substantial number of employees.
Furthermore, this legal battle is part of a broader conflict involving Binance, Binance.US, and Changpeng Zhao. The SEC has already filed a lawsuit against them for selling unregistered securities and mixing customer assets with those of another entity controlled by Zhao.
With mounting legal challenges and potential consequences, the future of Binance.US hangs in the balance. The outcome of the ongoing investigation and the court’s decision regarding the SEC’s allegations will shape the company’s fate in the cryptocurrency industry.
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