Changpeng "CZ" Zhao, the CEO and
Co-Founder of Binance, has refuted claims that Binance.US utilized custody
software provided by its international counterpart, Binance Holdings Ltd (BHL),
which was later rebranded as Ceffu.
This denial has put CZ at odds with prior statements
made by lawyers representing Binance.US in an ongoing investigation by the SEC.
The SEC is currently embroiled in a probe focused on ensuring that assets held
by the U.S. branch of Binance do not find their way overseas.
In a post on X (formerly Twitter), CZ firmly
asserted, "For the record, Binance.US does not use, and have NEVER used
Ceffu or Binance Custody." This statement contradicts the narrative put forth
by Binance.US's legal team, who had previously acknowledged the use of custody
software provided by BHL and marketed as Ceffu, according to a report by
For the record. Binance US does not use, and have NEVER used Ceffu or Binance Custody.You can't just make this stuff up. ????♂️ https://t.co/JIkIVTf8tc— CZ ???? Binance (@cz_binance) September 19, 2023
Binance.US’ Legal Troubles Intensify
BAM had maintained that they relied on wallet
custody software developed by BHL to manage their customers' digital assets. In
an attempt to clarify their position, Binance.US even adopted the name "Ceffu"
as a shorthand reference for the software when corresponding with the SEC.
However, the SEC has presented documents that appear
to challenge CZ's claims. While Ceffu has publicly denied providing services to
Binance.US and even claimed not to operate in the United States, the SEC's
filings suggest otherwise. An August 3 screenshot of the Ceffu website
indicates that Ireland-based Binance Institutional Holdings Limited controlled
the custodian's trademarks and data. Additionally, it mentions a Singaporean
entity, Binance Institutional SG Pte, as one of its operating arms that support
services from Ceffu.
The legal battle between the SEC and Binance.US took
a new turn this week when the SEC sought
an extensive investigation into the cryptocurrency exchange's asset custody
services. The move by the SEC followed allegations of evasive responses and shifting
narratives by Binance.US. This development revolves around a protective order
sought by Binance.US in response to what they called a "fishing
expedition" by the regulator.
SEC's Legal Battle against Binance.US
The SEC's legal action against Binance.US begun in
June, when the regulatory authority filed
a lawsuit targeting Binance.US, its parent company Binance Holdings, and the Co-Founder CZ. The central allegation revolved around operating an unlicensed
securities exchange, raising significant concerns regarding investor protection
and adherence to regulatory guidelines.
The SEC has expressed suspicions that Ceffu may be
utilized by Binance.US to potentially transfer U.S. customer funds beyond
national borders. The SEC's filing states: "The SEC seeks an order
compelling BAM to produce documents and communications concerning any entity
providing it wallet custody software and related services."
In response, Binance.US has mounted a strong defense.
On September 12, the exchange's legal team submitted
sealed documents, labeling many of the SEC's demands as
"unreasonable" and "excessively burdensome."
This article was written by Jared Kirui at www.financemagnates.com.