Citing a lack of cooperation from counterparties in the case, the SEC is seeking approval of an order to inspect Binance US to look for evidence that will help the Commission bring the case to a conclusion.
Of the four documents sent by the SEC this Monday (18), one is the testimony of Erik Kellogg, director of information security at BAM Trading. A second statement does not mention the name of the suspect; both are sealed and cannot be read by the public.
The other two documents are partially censored, but are enough to understand the motivation of the SEC, which wants to obtain more information about BAM Trading, a company linked to Binance.
“The limited inspection that the SEC has been able to conduct to date demonstrates the urgent need for an inspection”the Commission emphasized in the uncensored section. “The Court should order the inspection requested by the SEC as set forth in its motion to compel.”
SEC is concerned about Binance US providing evidence
Brian Shroder stepped down as CEO of Binance.US last week. In addition to him, the US cryptocurrency broker also laid off 1/3 of its employees. In the document sent by the SEC this Monday (18), the Commission seems uneasy about the departure of several professionals, citing the urgency to collect new evidence.
“The accelerated mass exodus of BAM employees [Trading]including the CEO and others who may have critical information about the custody, control and availability of assets, further highlights the urgent need for rapid discovery of these issues.”writes the SEC. “This Court should reject BAM’s half-hearted claims of irrelevance, bias and burden and instead grant the motion to compel in its entirety.”
“The SEC is seeking an order compelling BAM to produce documents and communications relating to any entity that provides portfolio custody software and related services.”
In line with this, the US Securities and Exchange Commission also emphasizes that BAM Trading has only provided one “extremely limited amount of information”.
Elsewhere he also mentions a “that the mysterious entity called “Ceffu”, related to Binance, has caused a lot of confusion about who controls the crypto assets of BAM customers”.
According to the SEC, the request to inspect Binance.US relates to the issue of understanding who controls BAM Trading and therefore the cryptocurrencies it holds.
“Apparently this person is no longer Brian Shroder (if he ever was), as the SEC was notified in recent days that he has left the company.”writes the SEC. “It also raises the question of whether anyone else [Changpeng] Zhao and Binance have already exercised control over BAM and its assets.”
Elsewhere, the Commission also highlights that the second CEO of BAM Trading left his position when he realized that Changpeng Zhao was the CEO of BAM and not himself. That’s why the SEC aims to gather testimony from as many people as possible, arguing that the defense’s arguments say no “specific basis for your objections”.
“Binance and BAM are jointly owned by another defendant in this action [Changpeng Zhao]a person who believes himself to be beyond the jurisdiction of any court.”
Trading volume on Binance.US reflects the crisis following the SEC lawsuit
Also this Monday (18), Will Clemente, a market analyst, marked the sharp drop in trading volume on Binance.US after the broker was sued by the SEC.
“Trading volume on Binance US has dropped 99.2% over the past six months.”
At the time of writing, neither Binance nor Binance.US and its founder, Changpeng Zhao, had publicly responded to the SEC’s request. Space is left for an answer.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.