The legal battle between American crypto exchange Binance.US and the United States Securities and Exchange Commission (SEC) continues as the regulatory agency brings up new allegations against the exchange.
In a Monday court filing, the SEC alleged that the crypto exchange worked with a digital wallet service called Binance Custody, which was rebranded earlier this year as Ceffu. The agency claimed that Ceffu was used to move users’ funds out of the country without their knowledge, thereby breaching a previous agreement not to do so.
Changpeng Zhao (CZ), the founder of the leading crypto exchange Binance, took to X (formally Twitter) an outright denial of the American exchange’s ties with Ceffu or Binance Custody.
“For the record. Finance US does not use, and have NEVER used Ceffu or Binance Custody. You can’t just make this stuff up,” he wrote.
U.S. SEC vs. Binance.US
The SEC’s probe into Binance.US dates back to early June. The financial watchdog sued the American crypto exchange, alongside its parent company, Binance, and its CEO, CZ, over claims of violating securities laws.
On Monday, the agency submitted a court filing with a federal magistrate judge, requesting permission to probe the crypto exchange’s software.
However, the regulatory watchdog’s request was declined by the judge, who said that he was not “inclined to allow the inspection at this time.” He urged the financial agency to make further investigations and present “more tailored requests.”
Impact of Lawsuit on Binance.US
The three-month-long lawsuit against Binance.US has affected its business activities. Over the past three months alone, the exchange has recorded mass withdrawal volumes. According to the analytics platform CoinStats, the exchange’s trading volume dropped from over $74 million to $11 million.
Binance.US has also conducted two rounds of layoffs, downsizing its workforce. Earlier this month, the company’s CEO, Brian Shroder, also stepped down from his role as CEO of the exchange.
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