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Binance.US CEO Leaves Embattled Crypto Exchange - The Wall Street Journal
The United States Securities and Exchange Commission (SEC) has accused Binance.US of non-cooperation in the ongoing investigation against the crypto exchange, according to a court filing dated Sept. 14.
The SEC in its court filing noted that Binance.USs holding company called BAM has produced only 220 documents during the discovery process. Many of the submitted documents under the Consent Order consist of unintelligible screenshots and documents without dates or signatures.
SEC added that BAM has refused to produce essential witnesses for deposition, instead agreeing only to four depositions of witnesses it has unilaterally deemed appropriate and said:
The SEC also raised concerns over Binance.US's use of Ceffu, wallet custody software provided by the global entity Binance Holdings Ltd. The SEC noted that BAM made inconsistent statements about Ceffus and Binances involvement in the wallet and customer funds management.
SEC said that BAM first claimed Ceffu was BAMs wallet custody software and services provider but later stated that Binance was BAMs wallet custody software provider. The regulators raised concern that the crypto exchange's usage of Ceffu violates a prior agreement meant to prevent funds from being diverted abroad.
Related: Binance plans new round of layoffs amid increased regulatory scrutiny
The SEC filed a lawsuit against Binance on June 5, pressing 13 charges against the crypto exchange including unregistered securities offerings, the Simple Earn and BNB Vault products, and its staking program. The SEC claimed that Binance.com, Binance.US, and BAM Trading should have registered as clearing agencies, broker-dealers, and exchanges, respectively. The unregistered offer and sale of Binance.US' staking-as-a-service programme required BAM Trading to register as a broker-dealer as well.
The latest accusations by the SEC against Binance.US come amid an internal crisis at the exchange. The Binance.US CEO Brian Shorder joined the long list of top Binance executives leaving the firm this year followed by the resignation of the head of legal and the exchanges chief risk officer within days.
Binance.US didnt immediately respond to requests for comments.
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Binance.US not cooperating with investigation, US SEC says in filing - Cointelegraph
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In the ongoing legal clash between Binance, the prominent cryptocurrency exchange, and the US Securities and Exchange Commission (SEC), a significant hearing date has been scheduled for two crucial motions.
As per the recent court filing, Magistrate Judge Zia M. Faruqui has designated the hearing for Monday, September 18, at 1:00 PM ET.
The pivotal motions numbered 95 were filed by BAM Management and BAM Trading Services, the legal entity of Binance.US, and 102 by the SEC, respectively.
Motion 95, known as the protective order, aims to secure specific sensitive information filed by Binance's affiliates.
Meanwhile, Motion 102, presented by the SEC, opposes the protective order and seeks permission to file certain documents under seal.
On the scheduled date, Judge Faruqui will listen to arguments from Binance's affiliates and the SEC. The SEC is anticipated to argue against the protective order and request authorization to keep certain documents confidential.
In a joint motion submitted on Monday, Binance Holdings and Binance.US proposed a protective order to govern how sealed documents are treated and disclosed during litigation.
However, the US SEC has a different stance, seeking additional details from Binance.
Binance.US also submitted sealed documents for the proposed order and opposed the SEC's motion to compel, among other requests.
The filing made on September 12, is the latest development in the legal standoff between the SEC and Binance, where Binance.US has called the compel and reply motion by the SEC unreasonable and unduly burdensome.
In the court documents, Binance.US argued that the depositions requested by the SEC are excessive. The defendant's attorneys highlight that the SEC's claims revolve around custody, transfer, and commingling of user assets, for which ample evidence has been provided by staff members with direct knowledge of the matter, including the chief information security officer, Erik Kellogg.
The subsequent day saw the resignation of Brian Shroder, the President and CEO of Binance US. While the reason for his departure was not disclosed, Norman Reed, the Chief Legal Officer, has been appointed interim CEO.
In response to this news, Binance also announced the termination of over 100 employees, constituting approximately one-third of its workforce.
CEO Changpeng Zhao attributed these layoffs to the SEC's actions, accusing the commission of hampering the industry and impeding American jobs and innovation.
"The SEC's aggressive attempts to cripple our industry and the resulting impacts on our business have real-world consequences for American jobs and innovation, and this is an unfortunate example of that."
This legal battle began in June, when Binance was charged by the US Securities and Exchange Commission with 13 charges against Binance.US and its CEO, Changpeng Zhao, for allegedly violating US securities regulations.
These charges encompass offering unregistered securities and failing to restrict US investors from accessing the Binance.com platform.
Binance.US refuted the SEC's allegations of misconduct in non-motion documents, asserting that there is no evidence of commingled funds, control by Binance CEO Changpeng Zhao, or diversion of customer assets.
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Binance.US, the American arm of the global cryptocurrency exchange giant Binance, has been accused of non-cooperation in an ongoing probe by the US Securities Exchange Commission (SEC).
The SEC has alleged that Binance.US's staking, clearing, and brokerage services violate federal securities law.
In a court filing released Thursday, SEC has targeted Binance.US's use of Ceffu, a custody service provided by Binance Holdings Ltd, the international arm of the Binance empire.
U.S. regulators are concerned that this use of Ceffu custody may breach a previous agreement designed to prevent assets from being moved overseas.
The SEC also voiced its concerns about Binance.US's handling of the probe in the court filing.
The regulatory agency claimed that the company's holding entity, known as BAM, had provided a limited and inadequate amount of evidence during the discovery process.
According to the SEC, BAM had furnished only around 220 documents, many of which were described as "unintelligible screenshots'' and lacked dates or signatures.
The SEC's contention is that this limited cooperation from BAM raises questions about whether the company is violating the terms of the earlier consent order.
This order was established to ensure that only local U.S. staff have access to customer funds, a crucial safeguard in the realm of cryptocurrency exchanges.
Binance.US has pushed back against the SEC's allegations.
In a filing dated September 12, the company dismissed the regulator's concerns over Ceffu as "much ado about nothing."
Binance.US also characterized the SEC's demand for additional documents as a "futile fishing expedition."
The cryptocurrency exchange argued that merely providing the Ceffu software for wallet creation does not imply that its international arm has custody or access to customer funds.
Amidst these regulatory challenges, Binance.US recently announced a significant workforce reduction, shedding one-third of its employees.
Among those departing are Chief Executive Officer Brian Shroder, as well as the company's head of legal and chief risk officer.
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SEC Accuses Binance.US of Non-Cooperation in Probe Over ... - Cryptonews
Binance is one of the largest and most popular cryptocurrency exchanges in the world. It offers a wide range of services, such as spot trading, futures trading, margin trading, staking, lending, and more. It also supports hundreds of cryptocurrencies and tokens, including its own native token, BNB.
However, despite the fear, uncertainty and doubt (FUD) that has been surrounding Binance in recent months, the leading cryptocurrency exchange platform continues to demonstrate its resilience, innovation and influence in the crypto space. Binance has faced regulatory challenges, security breaches, and public scrutiny, but it has also launched new products, services and initiatives that aim to advance the adoption, development and democratization of crypto assets. Some of the issues that have plagued Binance include:
Regulatory scrutiny and legal challenges from various countries and jurisdictions, such as the UK, Japan, Germany, Italy, Thailand, Singapore, and the US. Some of these regulators have accused Binance of operating without proper licenses or authorization or violating anti-money laundering and consumer protection laws.
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Technical glitches and outages that have affected its platform and services, causing delays, errors, and losses for some users. For example, in May 2021, Binance suffered a major system outage that lasted for several hours and prevented users from accessing their accounts or executing trades.
Security breaches and hacks that have compromised its security and reputation. For example, in May 2019, Binance was hacked and lost 7,000 BTC (worth about $40 million at the time) from its hot wallet. Although Binance covered the losses with its own funds and no user funds were affected, the incident raised concerns about its security measures and practices.
Community backlash and user complaints that have tarnished its image and trustworthiness. Some of these complaints include:
Accusations of market manipulation and insider trading by Binance or its affiliates. For example, some users have claimed that Binance has deliberately crashed or pumped the prices of certain coins or tokens to benefit itself or its partners.
Allegations of censorship and bias by Binance or its staff. For example, some users have reported that Binance has deleted or hidden negative comments or reviews on its social media platforms or forums.
Disputes over customer service and support by Binance or its agents. For example, some users have complained that Binance has failed to respond to their queries or requests in a timely or satisfactory manner or has refused to provide adequate compensation or solutions for their issues.
All these issues have contributed to a phenomenon known as FUD (fear, uncertainty, and doubt) among the crypto community and the general public. FUD is a term used to describe negative sentiments or emotions that can affect the perception and behavior of investors or traders. FUD can cause panic selling, price drops, reduced confidence, and lower adoption.
FUD can also be spread intentionally or unintentionally by various actors or sources, such as:
Competitors or rivals who want to undermine or discredit Binances reputation or market share.
Media outlets or influencers who want to generate clicks or views by sensationalizing or exaggerating Binances problems or controversies.
Regulators or authorities who want to discourage or restrict Binances operations or activities in their jurisdictions.
Hackers or scammers who want to exploit Binances vulnerabilities or weaknesses to steal funds or data from its users.
Trolls or haters who want to cause chaos or damage for fun or personal reasons.
FUD can have serious consequences for Binance and its users. It can affect its growth potential, profitability, innovation, customer loyalty, and social impact. It can also create a negative feedback loop that can amplify the FUD and make it harder to overcome. Therefore, it is important for Binance and its users to be aware of the FUD and how to deal with it. Some of the possible ways to combat FUD include:
Educating oneself and others about the facts and realities of Binances situation and performance. This can help dispel misinformation, rumors, or myths that may fuel FUD.
Supporting and engaging with Binances community and initiatives. This can help foster a sense of belonging, trust, and positivity among Binances users and stakeholders.
Reporting and exposing any malicious or fraudulent activities that may harm Binances security or integrity. This can help prevent or mitigate any potential losses or damages caused by hackers or scammers.
Providing constructive feedback and suggestions to Binances team and management. This can help improve Binances services, products, features, and policies.
Diversifying ones portfolio and risk management strategies. This can help reduce ones exposure and dependence on Binances performance or outcomes.
FUD is inevitable in the crypto space, especially for a leading player like Binance. However, FUD is not insurmountable. By being informed, proactive, supportive, vigilant, and resilient,
Competition: Binance faces fierce competition from other cryptocurrency exchanges that offer similar or better services and products. Some of these competitors include Coinbase, Kraken, Huobi, OKEx and Bitfinex. These exchanges may have advantages over Binance in terms of market share, reputation, regulation, security or innovation.
For example, Coinbase is one of the most regulated and trusted exchanges in the US market and has recently gone public on Nasdaq. Kraken is also pursuing a public listing and has obtained a banking charter in Wyoming. Huobi has a strong presence in China and Asia and has launched its own blockchain platform called Huobi Chain.
Community backlash: Binance has also faced criticism from some members of the cryptocurrency community for its actions or policies that may be seen as unethical or unfair. For example, in April 2020, Binance delisted Bitcoin SV (BSV), a controversial fork of Bitcoin Cash (BCH), after its founder Craig Wright threatened to sue anyone who disputed his claim of being Satoshi Nakamoto, the creator of Bitcoin.
In July 2020, Binance acquired CoinMarketCap (CMC), one of the most popular websites for tracking cryptocurrency prices and data, raising concerns about potential conflicts of interest and manipulation of rankings. In August 2020, Binance launched its own blockchain platform called Binance Smart Chain (BSC), which some critics accused of being centralized and copying Ethereums features.
These are some of the reasons why FUD incessant on Binance. However, despite the FUD, Binance remains one of the most influential and innovative players in the cryptocurrency industry. It has also taken steps to address some of the issues it faces and improve its services and products. For example, it has launched new initiatives such as Binance Charity Foundation (BCF), Binance Academy (BA), Binance Research (BR) and Binance Labs (BL) to support social causes, education, research and innovation in the crypto space. It has also partnered with various organizations and institutions such as TravelbyBit (TBB), Swipe (SXP), WazirX (WRX) and Crypto.com (CRO) to expand its ecosystem and reach new markets.
Binance has shown resilience and adaptability in responding to the changing regulatory landscape and customer needs. Binance has also reaffirmed its commitment to working with regulators and authorities to ensure compliance and cooperation. Binance has stated that it welcomes constructive guidance and feedback from regulators, as it strives to create a more sustainable and secure environment for the industry.
Binances vision is to increase the freedom of money for everyone in the world. Binance believes that cryptocurrency is a powerful tool to empower people and create more opportunities and value. Binances mission is to provide the best platform and services for users to access and benefit from the cryptocurrency ecosystem. Binances values are customer-centric, innovative, collaborative, transparent, and responsible.
Binance is not just an exchange, but a community and a movement. Binance has a loyal and passionate user base, who support and contribute to its growth and development. Binance also has a strong and diverse team, who share the same vision and values. Binances team is composed of experts from various fields and backgrounds, who bring their skills and experience to the table. Binances team is also distributed across different regions and time zones, which allows them to serve their global user base effectively.
Binance is not afraid of challenges but embraces them as opportunities to learn and improve. Binance is not complacent with its achievements, but constantly seeks new ways to innovate and add value. Binance is not isolated from the industry, but connected and supportive of its peers and partners. Binance is not only a leader, but also a follower of the industry trends and best practices.
Binance is here to stay, and here to grow. Binance is confident that it can overcome any obstacles or difficulties that may arise along the way. Binance is optimistic that it can continue to deliver on its promises and expectations. Binance is grateful for the trust and support of its users and stakeholders. Binance is proud of its role and contribution to the cryptocurrency industry.
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