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CZ Zhao defends Binance.US amidst SEC’s ‘Ceffu’ controversy

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TL;DR Breakdown

  • SEC and Binance.US face increasing tensions over regulatory concerns.
  • Allegations suggest Binance.US exposed customers to foreign business risks via an affiliated custody unit.
  • CEO Changpeng “CZ” Zhao refutes any ties between ‘Ceffu’ or Binance Custody and Binance US.

Description

Tensions are rising in the Securities and Exchange Commission (SEC) and crypto exchange Binance. The Allegations is that Binance.US, a subsidiary of the global entity, exposed customers to potential foreign business risks through a supposedly affiliated custody unit. Binance’s charismatic CEO, Changpeng “CZ” Zhao, doesn’t mince words. Responding to the claims, he fervently clarified that … Read more

Tensions are rising in the Securities and Exchange Commission (SEC) and crypto exchange Binance. The Allegations is that Binance.US, a subsidiary of the global entity, exposed customers to potential foreign business risks through a supposedly affiliated custody unit.

Binance’s charismatic CEO, Changpeng “CZ” Zhao, doesn’t mince words. Responding to the claims, he fervently clarified that neither ‘Ceffu’ nor Binance Custody are associated with Binance US. On the widely followed social network that recently surpassed Twitter in popularity, Zhao asserted, “You can’t just make this stuff up.”

The SEC, however, is not easily appeased. Their primary concern revolves around ‘Ceffu,’ which they perceive as a “newly rebranded Binance Entity” responsible for holding client funds. Per a recent consent order, Binance’s US-based arm, BAM, is not authorized to employ a “foreign Binance affiliated third-party for wallet custody services.” The regulator’s radar is keenly focused on this point, pressing for more information about the safety of user funds on Binance.US.

Adding to the intrigue, court documents revealed that BAM deploys a wallet custody software designed by Binance Holdings Limited. To make matters more perplexing, BAM referred to this software as ‘Ceffu’ during communications with the SEC. BAM’s defense? It was merely a shorthand reference due to the need for an official name for the software. This sentiment was echoed by BAM’s legal team, who argued that referencing ‘Ceffu’ resulted from a terminology mix-up concerning the unbranded software.

Despite these clarifications, the SEC still needs to be convinced as it argues that BAM’s statements concerning ‘Ceffu’ and Binance’s involvement have been inconsistent.

In a hearing held in Washington, DC, the judicial bench seemed eager for a resolution. The presiding judge urged the SEC and BAM to find a middle ground, hinting at needing to “turn down the temperature.”

This isn’t the first time Binance has locked horns with the SEC. The regulatory body filed charges against the exchange and Zhao earlier in June. The severe accusations pointed to potential violations of multiple federal securities laws. At the heart of the matter was an alleged misrepresentation about who supervised the Binance.US platform.

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