July 21, 2024
Binance and SEC Continue Legal Struggle in Court
Latest Cryptocurrency News

Binance and SEC Continue Legal Struggle in Court

The conflict between Binance and the United States Securities and Exchange Commission (SEC) persists, primarily concerning evidence production and witness depositions, according to court documents. A joint status report filed on Jan. 25 reveals that the SEC asserts there are crucial outstanding aspects of discovery from BAM Trading Services, the parent company of Binance.US.

The SEC’s extensive requests for evidence have triggered contention, especially regarding asset custody and liquidity. The regulator seeks evidence on whether Binance.US had a backdoor to potentially control customer assets, akin to FTX. BAM’s attorneys argue they have fully complied with document production requirements, urging the court to acknowledge their completion.

“At that point, BAM believes it will have more than reasonably complied with its obligations under the Consent Order and requests that expedited discovery be deemed complete as to BAM, particularly given how much harm and burden the SEC’s TRO and approach to expedited discovery has caused BAM over the past seven months.”

The consent order outlines the SEC’s investigation scope, and BAM contends it should be limited to confirming the safety and proper accounting of customer assets. They accuse the SEC of exceeding this scope by broadly investigating custody policies, procedures, and practices. Witness examination is another point of contention, with pending requests for BAM’s former CEO and CFO, likely Brian Shroder and Jasmine Lee.

“BAM does not believe that the SEC is entitled to any additional depositions from current or former BAM personnel because, among other reasons, the SEC has already deposed a dozen witnesses during expedited discovery.”

Discussions also involve a potential examination of Binance co-founder Changpeng Zhao, with disagreements over scope, timing, location, and number of depositions. Zhao resigned in November 2023 as part of a $4.3-billion settlement and faces sentencing on Feb. 23, 2024. He is currently free on a $175 million bond, potentially facing up to 18 months in prison. The next status report is due by Feb. 15.

Image by wirestock on Freepik

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