Binance.US Faces SEC Scrutiny Over Its Custody Service, Ceffu

SEC Targets Binance.US

In recently disclosed court filings, Binance.US finds itself under fire for purportedly not complying with an inquiry by the Securities and Exchange Commission (SEC). The SEC claims that the company’s operations, which include staking, clearing, and brokerage, contravene U.S. federal securities regulations.

International Custody Concerns

Central to the dispute is Binance.US’s use of Ceffu, a digital asset custody service furnished by its global counterpart. Federal regulators voice apprehensions that using this service might infract a pre-existing agreement meant to deter the transfer of assets abroad.

Sparse Evidence?

The SEC’s frustrations with Binance.US also touch on the discovery process. Binance.US’s parent firm, BAM, has handed over a mere 220 documents, with the majority being vague screenshots or undated, unsigned papers. Such limited evidence submission is causing regulators to question whether the defendants breach the consent order – a prior legal agreement ensuring only U.S.-based staff can access funds.

Behind the Ceffu Controversy

The SEC’s specific qualm centers on Binance.US’s deployment of Ceffu, a wallet custody solution supplied by Binance Holdings Ltd, an international outfit. This suggests that other segments of Changpeng “CZ” Zhao’s conglomerate might potentially exercise control over the assets of American clients. However, in a filing dated September 12, Binance.US rebuffed the SEC’s anxieties about Ceffu as unwarranted fuss. Binance.US underscored that merely facilitating the Ceffu software doesn’t imply that the global division holds or has any admission to user funds.

Binance.US’s Response

Binance.US refutes the SEC’s concerns, branding them as inflated. In their viewpoint, the regulator’s escalating document demands amount to a fruitless quest for incriminating evidence. Binance.us remains steadfast in its stance that merely supplying the Ceffu software doesn’t inherently grant its international branch access to customer’s funds.