SEC vs. Binance: strong doubts about full coverage of customer deposits

The U.S. Securities and Exchange Commission is complaining about Binance's lack of cooperation and is now demanding more insight into its crypto holdings.

The U.S. branch of the world's largest crypto exchange Binance keeps getting into trouble. The SEC's doubts about full coverage of customer deposits on Binance.US are increasing.

According to recently published court documents even Binance's own accountant had trouble certifying full coverage.

According to the documents, it was "very difficult to ensure that the company was fully covered at certain times."

At the same time, the authority accused Binance of a lack of willingness to cooperate and is now demanding an urgent investigation into the exchange's custody methods.

Specifically, the SEC is asking to see internal documents that show which entity actually holds the exchange's customer funds.

The latter is suspected of mixing deposits from the U.S. branch with those of the international service through the alleged third-party provider Ceffu.

Lawyers for the crypto exchange, meanwhile, complained that the authority's requirements were "too broad" and caused too much "inconvenience." Moreover, the SEC was behaving in a "repressive" manner, they said.

At a hearing yesterday, New York Judge Zia Faruqui rejected the SEC's request. Both sides would still have to work together to work out the data to "keep the business going," Faruqui said.

So while he asked the SEC to further narrow its request, Binance should release more detailed information about its relationship with custodian Ceffu to prove the "safety of customer funds."

The next hearing in the SEC v. Binance.US case will follow on Oct. 12 of this year.