Binance CEO Changpeng Zhao (CZ) issued a statement denying that Binance.US, the company’s U.S. subsidiary, ever utilized Ceffu or Binance Custody for custodial services.
Zhao’s statement responded to a request from the Securities and Exchange Commission (SEC) to investigate possible violations of rules related to the movement of funds by Binance. The SEC expressed concerns that Binance.US might transfer U.S. customer funds abroad, violating prior agreements if it used Ceffu, a third-party custodian.
https://twitter.com/cz_binance/status/1704116090089968082?s=46&t=aw6ZR-6aD050XLPVXY8AQA
However, Zhao’s denial appears to contradict previous statements that Binance.US made in court filings. In those filings, Binance.US acknowledged employing custody software initially provided by Binance Holdings Ltd, which later became known as Binance Custody. The filings and correspondences frequently mentioned Ceffu.
Contradictions
Following Zhao’s denial, many people have begun questioning the validity of Binance.US’s previous statements, especially given the apparent contradictions. Some are calling for the company to provide additional clarification.
On the social media platform X (formerly Twitter), fund manager Adam Cochran pointed out what he believed to be a major discrepancy between Zhao’s recent statement and Binance.US’s past court documents. He expressed concern that, if Zhao was willing to misrepresent the facts in a legal document, there was no reason to believe his statements regarding the safety or security of the company’s assets.
The growing controversy surrounding Binance is posing additional challenges for the exchange as it tries to address allegations of operating an unregistered exchange and listing unregistered securities in the United States. The emergence of Ceffu adds yet another point of contention to the already tense relationship between the exchange and regulatory authorities.
Binance.US has tried to distance itself from Binance by claiming that it is a separate entity that merely uses Binance’s wallet services. However, the SEC has alleged that the same individual controls both companies.
The SEC has requested a range of discovery information from Binance.US and related companies, including documents related to its wallet custody, its relationship with the Ceffu wallet, communications regarding customer assets, and other financial records.
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