Binance faces multiple charges from the SEC for failing to meet disclosure requirements

The U.S. Securities and Exchange Commission (SEC) claims that although Binance had agreed to expedite disclosure, it failed to provide sufficient documents.

SEC lawyers said BAM, the operating entity of Binance’s U.S. subsidiary, submitted about 220 documents, many of which contained unintelligible screenshots and documents lacking dates or signatures.

The entity also declined to make key witnesses testify, opting instead to offer testimony from only four witnesses it independently selected, according to documents released Thursday.

“[BAM] has comprehensively objected to the relevant communications requests and has refused to produce documents maintained in the ordinary course of its business, claiming that the documents do not exist, only to have the SEC receive such documents later from other sources,” the SEC said in the filing.

Binance.US has not responded to Blockworks’ request for comment as of press time.

Last month, Binance.US filed a motion for a protective order seeking to limit the SEC to just four depositions from BAM employees. The motion seeks to block the SEC from obtaining all of BAM’s communications, with the defendants claiming that many of the topics the SEC is looking into are not related to customer assets.

This week, the SEC and Binance entities filed a joint protective order designating sensitive information as confidential. As a result, confidential or non-public data must be submitted as protected material and access is limited to the judge, legal counsel, plaintiffs, defendants, and non-parties approved by the court. In the filing published Thursday, the SEC also expressed concerns about Binance.US's use of Ceffu, a custody service provided by a Binance affiliate, which appears to violate a previous agreement designed to prevent assets from being transferred overseas.

The SEC said it found inconsistencies in BAM’s statements about Ceffu and Binance’s roles in wallet and customer fund management. BAM said that contrary to the terms of the consent order, it may have violated the consent order by entrusting Binance entities with custody and control of its crypto assets and customer crypto assets.

Binance faces numerous obstacles following the SEC lawsuit, which includes 13 charges such as operating an unregistered exchange and issues related to its Binance.US affiliate. Several Binance.US executives, including CEO Brian Shroder, legal director Krishna Juvvadi, and chief risk officer Sidney Majalya, recently left the company in two rounds of layoffs. The upcoming hearing, which focuses on the protective order, is scheduled for September 18 at 1:00 PM EST.