SEC Eyes Virtual Inspection of Binance.US Tech Systems

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The U.S. Securities and Exchange Commission (SEC) is gearing up for a virtual examination of Binance.US’s technology systems and software. This move comes as part of ongoing legal proceedings involving Binance, its U.S. counterpart Binance.US, and co-founder Changpeng Zhao.

The parties involved have recently submitted a joint status report to the court, detailing the ongoing document production and deposition process. A virtual inspection of Binance.US’s technology is proposed for the near future.

Previously, the court had denied an immediate request for inspection, advising the SEC to refine its requests and consult additional witnesses. Binance.US has expressed opposition to the increasing number of document discovery and deposition requests by the SEC.

Binance’s legal entanglements extend beyond this inspection. In September, the company sought to dismiss the SEC’s case, arguing that the agency was overstepping its regulatory boundaries in the crypto sector.

Binance.US operates as a separate entity from the global Binance platform, with its own management and board. Despite its licensing agreement with Binance for technology and branding use, Binance.US faces its own regulatory and operational challenges. 

Registered with the Financial Crimes Enforcement Network (FinCEN), Binance.US lacks a federal banking charter or a New York State BitLicense, adding to its compliance complexities.

The exchange has faced scrutiny from multiple U.S. authorities, including the Commodity Futures Trading Commission (CFTC), the SEC, and the Department of Justice (DOJ), over alleged violations of securities laws and money laundering concerns.

Amid these challenges, Binance.US strives to cement its position in the U.S. market. Efforts include obtaining state licenses, partnering with local banks and payment processors, and enhancing its platform with more features and coins. 

However, restrictions in states like New York, Texas, and Florida limit its customer base and revenue potential. Additionally, the exchange grapples with issues of liquidity and trading volume, crucial for its growth and legitimacy in the competitive U.S. market. So, the SEC’s upcoming virtual inspection of Binance.US’s technology infrastructure marks a critical juncture in the ongoing legal saga.

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