SEC Says Binance “Unwilling” To Answer Key Questions, Asks Court To Order It To Comply

Updated: 06 March 2024

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The US Securities and Exchange Commission (SEC) said it’s reached an impasse with Binance.US because the crypto exchange is failing to answer key questions in connection with its investigation into its activities.

The regulator said in a Mar. 5 filing to a district court that BAM Trading Services, the legal entity trading as Binance.US, has been “unable or unwilling” to answer certain SEC questions, and asked that the Court intervene to order BAM to address outstanding issues.

SEC Says Binance.US Refuses To Comply With Basic Obligations

The primary focus of the SEC’s investigation is whether or not employees of the company’s non-U.S. arm have access to funds belonging to Binance.US customers. In its report, the regulator said that Binance.US has failed to prove that external employees do not have access to the funds in question.

It added that BAM Trading Services has “refused to comply with basic discovery obligations,” including not providing written responses to the SEC’s questions as well as not producing “attachments and metadata associated with responsive documents.”

“With regard to digital assets, the SEC has lost its way.”

In today’s @FortuneMagazine op-ed, Norman Reed, Interim CEO of @BinanceUS, highlights the SEC’s flawed approach to regulating digital assets and shares a path forward for the Commission and industry.

In the meantime, we…

— Binance.US 🇺🇸 (@BinanceUS) January 19, 2024

Binance.US responded to the SEC’s allegations by saying that it has “gone above and beyond” to answer the agency’s “exceptionally broad” requests for information. It added that it has handed over “thousands of documents” regarding “every conceivable aspect of its custody practices.”

The company subsequently asked the court to bring an end to the discovery process.

Left With No Choice But To Slash Its Workforce By 60%

The SEC’s lawsuit against Binance.US led to a 75% decrease in the company’s revenue, leaving it with no choice but to cut around two-thirds of its staff, according to the company’s COO, Christopher Blodgett, during a deposition in December.

The executive said that Binance.US’s trading volumes and business have “imploded” and added that approximately $1 billion in fiat and crypto funds left the platform shortly after the SEC’s temporary restraining order. Blodgett also said that Binance.US had done nothing wrong.