Binance And Ceffu Respond To SEC Allegations

Binance And Ceffu Respond To SEC Allegations

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Binance and Ceffu have responded to the Securities and Exchange Commission’s allegations that the wallet provider was in some way related to Binance. 

SEC’s Claims Regarding Binance And Ceffu 

In a filing regarding its motion to compel against BAM, the holding company for Binance.US, the Securities and Exchange Commission claimed that wallet provider Ceffu is related to Binance. This statement contradicts the stand taken by Binance in earlier court documents. The filing also argued that Binance’s application for a protective order against SEC investigation is meritless, calling on the court to deny the request. Binance had requested a protective order in the US District Court for the District of Columbia on the 14th of August, calling the SEC’s action a ‘fishing expedition.’ 

The Securities and Exchange Commission had, in a memorandum filed on the 14th of September, raised questions about Ceffu, stating that the company appeared to have control of customer assets. In response to Binance, the SEC stated, 

“The limited inspection the SEC has been able to conduct so far demonstrates the urgent need for an inspection. [redacted] The Court should order the inspection the SEC seeks as set forth in its Motion to Compel.”

BAM had asserted that Binance was merely a third-party vendor whose wallet software services were similar to BAM’s internet service provider. As such, it cannot be expected to know how it operates. However, the SEC countered, stating, 

“Far from being a mere innocuous service provider, however, Binance and BAM are under the common ownership of another Defendant in this action, an individual who views himself outside the jurisdiction of any court.”

Changpeng Zhao Issues Denial 

Zhao, who is Binance’s founder and CEO, denied that Binance’s US arm used custody software provided by its international counterpart. This denial apparently contradicts previous statements made by Binance.US in legal filings. Binance Custody, a wallet service rebranded to Ceffu, is in the middle of a probe initiated by the Securities and Exchange Commission, which is looking to ensure that the exchange’s assets will not be transferred overseas. 

“For the record. Binance US does not use and has NEVER used Ceffu or Binance Custody. You can’t just make this stuff up.”

A Contradictory Statement? 

Zhao’s statement is in contrast to statements made by lawyers representing Binance.US, who had stated that the exchange had used custody software sourced from Binance Holdings Ltd, later rebranded to Ceffu. The lawyers stated in a filing on the 11th of September, 

“BAM “relies on wallet custody software developed by BHL to maintain the digital asset wallets that hold much of its customers’ assets.” 

The filing further stated, 

“While BAM referred to the BHL software as ‘Ceffu,’ it never suggested that it licensed software from any entity other than BHL. BAM has been clear that it relies on wallet custody software licensed from BHL in all its correspondence with the SEC and submissions to this Court.”

Ceffu Responds to SEC Allegations 

Ceffu also responded to the Securities and Exchange Commission’s allegations regarding its third-party custody services, rejecting the claims made by the SEC. It stated that it was committed to servicing institutional clients with digital asset custody solutions in select jurisdictions, excluding the United States. 

“We have been made aware of the US Securities and Exchange Commission (SEC) ’s allegations involving Ceffu in its case brought against BAM Trading Services Inc. and BAM Management US Holdings Inc. In its filing on the 14th of September, the SEC claims that Ceffu has provided third-party “wallet custody software and support services” to BAM. We strongly reject this claim. As a custody technology services provider under Ceffu Holdings, we are committed to servicing institutional clients with digital asset custody solutions in select jurisdictions, excluding the United States, among others.”

Ceffu’s response also stressed that its operations and services are separate from those of BAM and BHL. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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