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SEC Raises Transparency Concerns, Files Complaint Against Binance.US

Cryptocurrency exchange Binance.US is not fully compliant with Securities and Exchange Commission requests for information about clients’ assets and other information, the U.S. Department of Agriculture said. law enforcement lawyers charged in a court filing Tuesday.

The SEC last year found that Binance Holdings Ltd, BAM Trading Services, and BAM Management.US violated U.S. security. safety regulations. Regulators claimed that assets of Binance.US customers were improperly transferred to the US in dollars.

The SEC alleged that Binance.US failed to comply with the terms of a consent decree in its transaction with a US-based crypto exchange and of its global parent.

US has not disclosed the SEC’s satisfaction that Binance’s global employees are not based in the US customer property access, the regulator said.

US said in the same filing that it answered all of the SEC’s questions and that the discovery request exceeded the limits of the consent order.

Binance and Binance.US have denied the claims and have filed for dismissal. Shortly after the lawsuit was filed in June, Judge Amy Berman Jackson signed a consent order directing Binance.US to ensure they have control of its customer's assets and start seeing them immediately.

However, Binance.US employees did not make all discovery requests, and were not substantially helpful in answering questions or otherwise addressing outstanding requests, SEC prosecutors said in a joint status report Tuesday.

Binance Holdings employees still run the Amazon Web Services servers that run the Binance.US wallet software, the letter said. The SEC also said Binance.US has not demonstrated that its employees have access to those private keys and customer assets, or that employees of Binance Holdings do not have the same access.

"Additionally, findings indicated that BHL could at least influence the transfer of BAM crypto assets from customers' wallets to hot wallets during transfer 'capture' through the PNK system to a discussion group he calls the 'BHL wallet group' while the BAM clearing group has 'technical issues' with the asset movement," the filing said.

In its response at the bottom of the filing, Binance.US said the clearing lead "occasionally contacted BHL employees for technical assistance," but Binance Holdings employees do not have jurisdiction over client assets rather than Binance.US crew

"The SEC has presented no evidence that BHL manages client assets to warrant a substantial burden finding on this issue. Also, if the SEC has additional questions about BHL's ability to secure the transfer of assets, it can ask BHL for clarification in the upcoming announcement of BHL employees," Binance said. The US said in the submission.

The SEC said it had several questions about whether Binance.US employees were properly monitoring transfers involving Binance Holdings; whether Binance.US employees outside the US had access to the exchange’s client property and whether the global firm also paid those employees; And all those with Binance.US’s cold storage and betting wallets.

Binance.US said the SEC’s ongoing requests for information far exceed the consent mandate. "Furthermore, there is no reason to impose additional funds because even 8 months after discovery, the SEC has not found the slightest evidence that BAM's client assets have not been securitized or have been misappropriated or disposed of either way," the letter said.

Binance Holdings added in the footnote that Zhao opposed the deposition request by the SEC because he is neither the CEO of Binance nor a director of Binance.us.

Conclusion: The SEC's filing of a complaint against Binance.US marks a significant development in the regulatory landscape surrounding cryptocurrency exchanges. The concerns raised about transparency not only impact Binance.US but also reflect broader issues within the industry.