SEC Accuses Binance.US of Non-Cooperation in Staking and Custody Probe

BySamson Ononeme

Sep 15, 2023
SEC Accuses Binance.US of Non-Cooperation in Staking and Custody Probe

Key Insights

  • The U.S. SEC has accused Binance.US of failing to cooperate in an ongoing probe.
  • The regulator is particularly concerned about Binance.US’s use of Ceffu, a custody service provided by Binance’s international arm.
  • In response to regulatory pressures, Binance.US has announced a significant downsizing of its workforce.

Binance.US, the American arm of the global cryptocurrency exchange, has found itself in the crosshairs of the U.S. Securities and Exchange Commission (SEC).

The SEC, in court documents made public last Thursday, accused the exchange of non-cooperation in an ongoing investigation.

The regulatory body alleges that Binance.US’s staking, clearing, and brokerage services are in violation of federal securities laws.

SEC’s main concern centers around Binance.US’s use of Ceffu

At the heart of the matter is the SEC’s concern about Binance.US’s use of Ceffu, a custody service provided by Binance’s international division. The SEC contends that this usage contravenes a prior agreement aimed at preventing the offshore storage of assets.

In essence, federal regulators are worried that Binance.US’s adoption of Ceffu might open the door for entities within Changpeng “CZ” Zhao’s global empire to gain control over U.S. customer assets.

The SEC’s frustration with Binance.US is palpable in the documents. According to the SEC, Binance.US’s holding company, known as BAM, has been less than forthcoming during the evidence-gathering process, known as discovery.

Read also! SEC Files Sealed Motion on Binance Crypto Exchange Case

They assert that BAM has provided a mere 220 documents, many of which consist of unintelligible screenshots and documents devoid of dates or signatures.

The SEC’s document, partially unsealed in August, raises questions about whether Binance.US is breaching a consent order that was intended to ensure that only local U.S. staff could access customer funds.

Binance.US countered SEC’s claims

Binance.US, for its part, appears to be pushing back against the SEC’s claims. In a previous filing on September 12th, the exchange dismissed the regulator’s concerns about Ceffu as “much ado about nothing.”

They characterized the SEC’s demand for additional documents as a “futile fishing expedition.” Binance.US contends that merely creating wallets as a provider of the Ceffu software does not translate into the international arm having custody or access to customer funds.

This clash with the SEC is just one of several regulatory challenges facing Binance.US. The exchange has also come under the scrutiny of the Commodity Futures Trading Commission (CFTC).

In response to these regulatory pressures, Binance.US announced a significant downsizing of its workforce, including the departure of its CEO, Brian Shroder. Key personnel, including the head of legal and the chief risk officer, are also reported to be leaving the company.

Samson Ononeme

Meet Samson Ononeme, a dynamic writer, editor, and CEO of With a passion for words and a sharp business acumen, Samson captivates readers with captivating storytelling and delivers insightful market analysis. He is a trailblazer in the finance industry, empowering individuals with knowledge and shaping the narrative of money. Get ready to be inspired by his literary prowess and entrepreneurial leadership.

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