The Securities and Exchange Commission (SEC) has accused crypto exchange Binance.US of not fully cooperating with its ongoing investigation.
The SEC's concerns primarily revolve around the safety and protection of U.S. investors' assets on the platform.
The filing highlights the regulatory body's growing concerns about the operations of Binance.US and its parent company, Binance Holdings.
The SEC's memorandum, filed in the District Court of Columbia in Washington D.C., targets Binance Holdings Limited, BAM Trading Services Inc., BAM Management US Holdings Inc., and Changpeng Zhao.
The filing comes at a time when the crypto industry is under increased scrutiny, with regulators aiming to ensure the safety of investors' assets.
This development will be a topic of discussion at Benzinga's Future of Digital Assets conference on Nov. 14, where industry experts will delve into the challenges and opportunities facing the digital asset space.
According to the SEC's documents, Binance.US had previously entered into a consent order with the regulator, agreeing to certain conditions to ensure the protection of its customers' assets.
However, the SEC alleges that Binance.US has not been fully transparent in its operations, particularly concerning the Ceffu wallet's custody of assets.
The SEC's filing states, "BAM has not produced a single document concerning Ceffu's custody of Binance.US customer assets."
The SEC has also raised concerns about the potential external influence on Binance.US's operations, especially from its parent company, Binance Holdings.
The regulator believes that Binance Holdings might have a significant say in the operations of Binance.US, which could pose risks to U.S. investors.
The SEC's filing mentions, "Binance Holdings' control and influence over BAM's operations are so pervasive that BAM cannot act independently of Binance Holdings."
The regulator has now sought the court's intervention to ensure Binance.US complies with its previous agreements and provides the necessary documents for the ongoing investigation.
The development comes on the heels of recent top-level departures at Binance.US.
Recently, the crypto exchange saw the exit of its CEO, Brian Shroder, along with the Head of Legal, Krishna Juvvadi, and Chief Risk Officer, Sidney Majalya.