The SEC Requests Further Action Against Binance.US

The SEC Requests Further Action Against Binance.US

The recent joint motion filed by the Securities and Exchange Commission (SEC) on March 5 has brought to light a series of allegations against Binance.US. The SEC claims that Binance.US has not adequately complied with regulatory requests for information on customer assets. The regulatory body alleges that the company’s inspections have been insufficient, critical questions have been left unanswered by the company’s counsel, and operational changes have been made without proper updates, among other issues. In response, Binance.US argues that it has fully complied with all information requests from the regulator and has accused the SEC of causing “material damage” to the firm.

The SEC first raised concerns about securities violations against Binance and Binance.US in June 2023. A temporary restraining order was subsequently obtained by the SEC against Binance.US, mandating the exchange company to provide data and comply with regulatory orders. One of the SEC’s primary concerns is whether entities outside of the US, such as Binance Holdings Limited, exert control over certain Binance.US crypto wallets. The regulator is particularly worried about the potential lack of autonomy in Binance.US’s control over customer assets, especially in relation to Binance Holdings employees potentially accessing funds through Amazon Web Services servers. This raises questions about the firm’s exclusive control over private keys and customer assets.

Aside from concerns about control over customer assets, the SEC has also raised questions regarding the existence of Binance.US personnel outside the US who are compensated by global Binance entities. Additionally, the regulator wants clarification on whether Binance.US has effectively monitored and prevented prohibited transfers to international entities associated with Binance. The SEC has requested the court to engage in further discovery, including a targeted deposition that would require a representative from Binance.US to provide binding testimony. The agency is also open to exploring other more limited discovery methods to address these operational concerns.

Binance.US has pushed back against the SEC’s claims, arguing that it has fully complied with all demands made by the regulator. The company contends that the SEC’s actions have led to significant damage, resulting in the loss of banking partners and active users. As a consequence, Binance.US has been forced to make drastic cuts, with Chief Operating Officer Christopher Blodgett revealing that over 200 staff members – or two-thirds of the company – have been let go since June 2023. User withdrawals totaling $1 billion have further exacerbated the financial strain on the exchange, with Binance.US reporting a more than 75% decline in revenues following the SEC’s actions.

The joint motion filed by the SEC paints a troubling picture of regulatory non-compliance and operational concerns at Binance.US. The ongoing dispute between the SEC and Binance.US underscores the challenges faced by cryptocurrency exchanges in navigating the complex regulatory landscape. As the legal battle continues, the ultimate impact on Binance.US and its users remains uncertain.


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