Home Altcoins News SEC Files Court Motion Over Binance’s Alleged Information Withholding

SEC Files Court Motion Over Binance’s Alleged Information Withholding


In the latest twist of the legal battle between the Securities and Exchange Commission (SEC) and cryptocurrency exchange Binance.US, the SEC has filed a court motion alleging that Binance.US has been withholding vital information pertinent to the ongoing investigation. The regulator claims that despite repeated requests, Binance.US, also known as BAM Trading Services, has failed to provide certain key insights, deepening the rift between the two parties.

The saga dates back to June, when the SEC initiated legal proceedings against Binance, a significant player in the cryptocurrency exchange realm. Initially targeting Coinbase alongside Binance, the SEC’s lawsuit has been a rollercoaster ride of negotiations, settlements, and allegations.

The SEC’s doubts are rooted in BAM witnesses’ testimony, stating, “BHL established and still retains custody of the private keys to these wallets in an Amazon Web Services environment that hosts BHL’s servers and wallet software for BAM’s wallets, and that BAM had no access to the AWS environment, servers, or software.”

Despite BAM’s overall cooperation, the SEC remains unconvinced, hinting at potential information gaps in the ongoing investigation.

Binance.US Counters Allegations

Binance.US representatives vehemently deny the SEC’s allegations, asserting that they have complied with all requests, even those deemed “exceptionally broad.” BAM’s legal team contends that they have surpassed their obligations as an institution, citing a refusal to disclose trade secrets unrelated to customer asset ownership.

In a significant development, the main Binance exchange, under the umbrella of Binance Holdings Ltd, agreed to pay substantial fines totaling $4.3 billion to settle with the SEC. Moreover, the former CEO, Changpeng Zhao, faced consequences as he was compelled to step down from his position. Currently, Zhao remains on bail, bound to stay within the confines of the United States until the conclusion of his sentencing.

Despite these developments, the SEC’s legal pursuit of Binance.US, the American arm of the global exchange, continues unabated. The latest contention revolves around the discovery process, where the SEC accuses Binance.US of obstructing the flow of crucial information.

In a joint report submitted to the Washington D.C. court overseeing the case, the SEC alleges that Binance.US’s cooperation has been inadequate. While Binance.US begrudgingly allowed agency representatives to inspect its in-house software, the SEC contends that the process was heavily scripted and failed to provide genuine insights into the inner workings of the exchange.

The SEC’s frustration mounts as it doubts Binance.US’s claim of exclusive access to private keys, essential for securing customer assets. The regulator alleges that Binance Holdings Ltd maintains custody of these keys, casting doubt on Binance.US’s assertions of independence.

However, Binance.US vehemently denies the SEC’s allegations, asserting that it has diligently responded to all requests, even those deemed overly broad. According to Binance.US’s legal team, the exchange has gone above and beyond its obligations, with the exception of withholding trade secrets unrelated to customer asset ownership.

The courtroom drama unfolds amidst heightened scrutiny of cryptocurrency exchanges and their regulatory compliance. With the SEC’s relentless pursuit of transparency and accountability, Binance.US finds itself embroiled in a high-stakes legal showdown that could shape the future landscape of cryptocurrency regulation.

As the legal battle intensifies, both sides remain entrenched in their positions, each vying for a favorable outcome. The outcome of this clash will not only impact Binance.US but also reverberate across the broader cryptocurrency ecosystem, influencing regulatory dynamics and market sentiments.

In the fast-evolving realm of digital assets, where innovation collides with regulation, the SEC’s standoff with Binance.US underscores the complexities and challenges inherent in governing decentralized financial systems. As stakeholders brace for further legal maneuvers and courtroom deliberations, the fate of Binance.US hangs in the balance, with far-reaching implications for the cryptocurrency industry at large.

Read more about:
Share on

Maheen Hernandez

A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5

Crypto newsletter

Get the latest Crypto & Blockchain News in your inbox.

By clicking Subscribe, you agree to our Privacy Policy.