SEC’s Push to Access Binance.US Software Hits a Roadblock – In a recent legal showdown, the U.S. Securities and Exchange Commission (SEC) found itself on the back foot after its request for immediate access to Binance.US’s software was denied by a federal magistrate judge.
The Backdrop
The SEC has been in a tussle with Binance.US, the American subsidiary of the global cryptocurrency exchange Binance. The core of the conflict? The SEC’s allegations that Binance.US, along with its international arm Binance Holdings Ltd and CEO Changpeng “CZ” Zhao, were involved in the sale of unregistered securities.
The Recent Hearing
A hearing was convened on September 18 to debate the SEC’s motion urging Binance to relinquish comprehensive details and ensure its executives are more accessible for depositions. However, Judge Faruqui wasn’t swayed by the SEC’s arguments. Instead of granting immediate access, the judge advised the SEC to refine its discovery requests and consider interacting with a broader spectrum of witnesses, as per a Bloomberg report from the same day.
The SEC’s Struggles with Binance.US
The SEC has voiced its difficulties in extracting information from Binance.US since initiating legal proceedings against the exchange on June 5. Merely a few days prior to the hearing, on September 15, the SEC spotlighted Binance.US’s alleged noncooperation in the ongoing investigation. The crux of the issue? BAM Trading, the holding entity of Binance.US, supposedly delivered a meager 220 documents during the discovery phase.
The SEC points out that a significant chunk of these documents were either “unintelligible screenshots” or lacked essential details like dates and signatures. To add salt to the wound, BAM has been accused of not presenting vital witnesses for deposition, agreeing only to those it deemed fit.
On the flip side, Binance has been vocal about its concerns, labeling the SEC’s continuous discovery requests as “unduly burdensome”. The SEC counters by stating Binance’s reluctance to cooperate, especially given that both parties had previously concurred on a discovery consent order.
The Implications of the Judge’s Decision
Judge Faruqui’s stance to withhold immediate access to Binance.US’s software data and other related documents can be seen as a hiccup in the SEC’s ongoing legal battle against the crypto exchange.
A pivotal aspect the SEC is keen to investigate is the custody of Binance.US customer assets. The regulator remains firm in its belief that a deeper probe into Binance.US is crucial to uncover potential ties to its global counterpart.
The legal skirmish between the SEC and Binance.US is shaping up to be an intriguing watch for the crypto community. With customer assets and potential global connections at the center stage, the coming chapters of this battle promise to be filled with intense deliberations and revelations.