Key Points:
- U.S. court dismisses SEC’s request to inspect Binance U.S. documents.
- SEC alleges Binance U.S. moved U.S. customers’ funds abroad via a related entity.
- Judge calls for additional documentation, raising questions about asset control.
On September 18th, a U.S. court dismissed the SEC’s bid to scrutinize Binance U.S. The cryptocurrency exchange stood resolute in its position, deeming the regulatory agency’s request as excessive.
Binance U.S., the American branch of the world’s largest cryptocurrency exchange, Binance, achieved a minor victory today. The exchange has been under intense scrutiny since the U.S. Securities and Exchange Commission (SEC) initiated legal action against it. While its trading volume has declined, key members of its executive team have also departed.
SEC’s Lawsuit Against Binance U.S.
Amidst this ongoing saga, the cryptocurrency exchange successfully defended itself against the SEC on September 18th. The SEC had previously sought an examination of Binance U.S. The SEC’s argument hinged on the assertion that the Ceffu, a custody platform, was, in reality, linked to Binance.
Furthermore, the SEC contended that this platform was employed to move funds of U.S. customers out of the country, thus violating the prior agreement between the exchange and the regulatory agency. Specifically, the SEC aimed to review the exchange’s records and communications with its wallet custody service providers. The legal filing stated,
“However, even this limited discovery has exposed that BAM (Binance U.S.) still cannot adequately explain its crypto asset wallet custody arrangements. BAM has also provided inconsistent information to the SEC about the roles of Defendant Binance Holdings Limited (“BHL” or “Binance”) and a related entity known as ‘Ceffu’ in the custody of Customer Assets.”
The Court’s Verdict
In response to these developments, the cryptocurrency exchange argued that the SEC’s request was excessive and burdensome. Ultimately, U.S. District Judge Zia Faruqui rejected the SEC’s request for inspection.
However, the court did require the cryptocurrency exchange to provide additional documentation. Judge Faruqui also expressed doubts regarding the exchange’s control over its assets.”
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