Binance.US Legal Filings Contradict CEO Changpeng Zhao’s Public Statements On Custody Software Use

Changpeng “CZ” Zhao, the CEO of Binance, has publicly spoken out against allegations made by the U.S. Securities and Exchange Commission (SEC). The regulatory body claimed that Binance.US, the American arm of the global cryptocurrency exchange, might have used a custody unit potentially linked to its parent company, thereby exposing clients to a foreign entity. However, Zhao denied these allegations in a post on X, the social network formerly known as Twitter.

You Can’t Just Make This Stuff Up: CZ

Crypto magnate Changpeng “CZ” Zhao has denied claims that Binance’s U.S. division utilized custody software from its global parent company, seemingly contradicting earlier legal statements made by Binance.US. The SEC is currently investigating Binance Custody, a wallet service now renamed as Ceffu, to ensure that assets from the U.S. exchange are not moved abroad.

Binance’s founder and CEO Changpeng ‘CZ’ Zhao stated on Tuesday, ‘For the record, Binance.US does not use, and have NEVER used Ceffu or Binance Custody.’ His comments came a day after Binance.US and the SEC faced off in a Washington, DC court over the matter

This sharply contradicts earlier claims by attorneys for the U.S. exchange, referred to as BAM in legal documents. These lawyers stated that Binance.US had utilized custody software supplied by its global counterpart, Binance Holdings Ltd (BHL), a program subsequently rebranded as Ceffu.

According to a court filing on September 12 by Binance.US—which is fighting to dismiss SEC accusations of running an unlicensed crypto exchange—the company “relies on wallet custody software developed by BHL to maintain the digital asset wallets holding a significant portion of its customer assets.” The filing added that the company adopted the name ‘Ceffu’ as a shorthand reference for the software when it learned that BHL planned to commercialize it, including in communications with the SEC.

Is Binance Doing Something Fishy?

The SEC want to obtain further details about Ceffu that seems to manage client assets. The agency has also pointed out that, according to a consent order, BAM is prohibited from employing a “foreign Binance-affiliated third-party for wallet custody services.”

An attorney for the SEC noted that BAM has provided “contradictory remarks regarding the roles of Ceffu and Binance.”

In its legal documents, Binance.US clarified that although it referred to the BHL software as ‘Ceffu,’ it never implied that the software was licensed from any other entity besides BHL. BAM has consistently stated in its communications with the SEC and court submissions that it uses wallet custody software licensed from BHL,” the filing by Binance.US elaborated.

At a Monday hearing, a district judge in Washington, D.C., urged both the SEC and BAM to collaborate and “de-escalate the tension.” Both parties consented to a hearing scheduled for October 12 and committed to submitting a joint status report by October 10.