CZ says Binance.US did not use entity at center of recent SEC allegations
Quick Take
- Binance unit Ceffu has been a point of contention between the Securities and Exchange Commission and the crypto exchange over its handling of U.S. customer assets.
- Binance CEO Changpeng “CZ” Zhao said its U.S. unit has not used the company.
- However, in court documents from last week, lawyers representing BAM said Ceffu was used as a shorthand reference to the software.
Binance CEO Changpeng "CZ" Zhao pushed back against allegations by the Securities and Exchange Commission that Binance.US used a custody unit possibly linked to its parent that could be exposing clients to a foreign entity.
"For the record. Binance US does not use, and have NEVER used Ceffu or Binance Custody. You can't just make this stuff up," Zhao posted Tuesday on X, the social network formerly known as Twitter.
Ceffu has been a point of contention between the SEC and Binance, with the regulator asking BAM, the company behind Binance.US, for more information on how customer assets are handled at Binance.US. It says that BAM has not obliged, while the company has called many of the requests for more information too broad or burdensome.
The SEC specifically wants more information about Ceffu, which the agency says is a "newly rebranded Binance Entity" that appears to control customer assets. The agency also has noted that BAM is not allowed to use a "foreign Binance affiliated third-party for wallet custody services," as per the consent order.
BAM has made "inconsistent statements about Ceffu's and Binance’s involvement," a lawyer for the SEC said.
In a court filing last week, BAM said it relies on a wallet custody software developed by Binance Holdings Limited to maintain the wallets that hold most of the customers’ assets.
“Accordingly, when BAM learned that BHL was planning to market the software commercially under the name ‘Ceffu,’ it adopted the name as a shorthand reference to the software, including in correspondence with the SEC,” BAM said in a court filing on Sept. 12.
"Counsel for BAM has also repeatedly explained that references to Ceffu were solely due to confusion of the correct terminology to use for the otherwise unbranded software," BAM's lawyers added.
Judge responds to SEC, Binance.US
During a hearing on Monday, a D.C. district judge asked the SEC and BAM to work together and "turn down the temperature."
The SEC sued the exchange and Zhao for violating multiple federal securities laws in June, arguing they misrepresented the oversight of the Binance.US platform.
The SEC and BAM agreed to an Oct. 12 hearing and to the filing of a joint status report by Oct. 10.
Updated at 12:15 p.m. to add details from BAM filing about the use of Ceffu
© 2023 The Block. All Rights Reserved. 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.
