In a Monday court filing, the U.S. Securities and Exchange Commission (SEC) escalated its legal battle with Binance.US, urging a D.C. court to authorize an inspection of the cryptocurrency exchange. Earlier, the SEC had accused the firm of failing to comply with the regulator’s requests for documents as part of ongoing legal proceedings, a report in CoinDesk said.
The SEC initially filed a lawsuit against Binance.US, its global parent company Binance Holdings, and founder Changpeng “CZ” Zhao in June, alleging that they were operating an unlicensed securities exchange. The SEC’s recent findings in the case, as detailed in Monday’s filing, underscore the pressing need for an inspection. The regulator expressed renewed concerns about Binance’s utilization of the custody platform Ceffu.
The SEC suspects that Ceffu, which underwent a rebrand earlier in the year from Binance Custody, may also be serving Binance.US. This suspicion raises the possibility of U.S. customer funds being moved out of the country, potentially violating a previous agreement that forbade such actions. This agreement was established because BAM Trading Services, the holding company for Binance.US, failed to convince the SEC that it had exclusive control over its customers’ assets. The SEC argued that BAM’s own documents and inconsistent explanations failed to substantiate its claims of control.
The filing stated, “The SEC seeks an order compelling BAM to produce documents and communications concerning any entity providing it wallet custody software and related services,” referring to BAM’s shifting explanations regarding Ceffu.
Meanwhile, Ceffu has maintained its stance as a “fully independent third-party technology service provider,” asserting that it is not part of Binance, though its ties to the crypto exchange remain somewhat unclear.
