May 29, 2024
Binance.US Challenges SEC's Demands as Unreasonable
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Binance.US Challenges SEC’s Demands as “Unreasonable”

Binance.US has replied to the motion to compel and the United States Securities and Exchange Commission (SEC)’s response, describing most of the SEC’s requests as “unreasonable” and “unduly burdensome.” On September 12, lawyers representing BAM Trading Services, the operator of Binance.US, submitted sealed documents opposing the SEC’s call for additional information from Binance.US.

The defendants contended that the SEC’s requests for production and interrogatories were excessively broad and fell outside the scope of the consent order. BAM’s legal team also argued that the SEC’s demand for certainty, along with the requests for depositions of BAM CEO Brian Shroder and Chief Financial Officer Jasmine Lee, was “unreasonable.”

BAM’s attorneys emphasized that the SEC’s motion failed to identify any evidence suggesting Shroder and Lee’s involvement in the day-to-day management details related to the custody and transfer of customer assets at Binance.US. “BAM’s CEO and CFO have no unique knowledge regarding facts relevant to the limited topics identified in the consent order’s expedited discovery provision,” stated the lawyers.

They also noted that BAM had offered numerous other witnesses with more comprehensive insights into BAM’s operations, including BAM’s Chief Information Security Officer, Erik Kellogg. The lawyers stated, “The burden imposed by these depositions far outweighs their potential benefit, and the discovery sought is disproportionate to the needs contemplated by the consent order.”

The lawyers also contended that the SEC lacks any substantiating evidence for its unverified claims, implying that there has been some diversion of customer assets. The defendants asserted that the SEC’s allegations, which constitute its cross-motion to compel, are misleading and erroneous. They further emphasized a profound disparity between the SEC’s excessively broad and aggressive approach and the limited expedited discovery agreed upon in the consent order.

BAM’s response followed shortly after an agreement between the SEC and Binance to file a protective motion. This agreement necessitates that confidential information be submitted under seal. Both the plaintiff and defendants jointly presented this motion on September 11, committing to designate confidential and non-public information as protected materials, with access limited to parties such as the judge, attorneys, plaintiffs, and defendants.

Image by fabrikasimf on Freepik

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