Binance SEC investigation faces turbulence as key information refusal sparks concerns

The US Securities and Exchange Commission (SEC) has made allegations against Binance and its co-founder Changpeng Zhao, along with other parties, accusing them of refusing to provide requested information regarding the safekeeping, security, and accessibility of assets belonging to US customers.

Officials from the regulatory agency have informed the court that even after more than two months had passed since the court’s approval, Binance partner BAM Trading Services declined to furnish “anything beyond extremely limited information.”

In a filing dated September 14, 2023, the SEC stated that it is seeking this information to determine whether BAM’s customer assets are under the control of Binance Zhao. Furthermore, the agency expressed concerns about whether Binance has violated the court’s order given the minimal information provided thus far.

The SEC has issued discovery requests with a specific focus on obtaining sufficient information to ensure the proper accounting of all customer and BAM assets. It was noted that BAM had refused to make essential witnesses available for deposition, agreeing only to four witness depositions. However, the filing pointed out:

“BAM has produced approximately 220 documents, many of which pertain to reporting obligations stipulated in the Consent Order, while others consist of indecipherable screenshots and documents lacking dates or signatures.”

Interestingly, the SEC’s filing coincided with the recent resignations of the Binance US Head of Legal and the Chief Risk Officer, marking a continuation of high-level departures from the company in recent weeks.