March 27, 2024
SEC's Binance.US Software Access Bid Hits Temporary Setback
Latest Cryptocurrency News

SEC’s Binance.US Software Access Bid Hits Temporary Setback

In a hearing on September 18, the United States Securities and Exchange Commission (SEC) faced a setback as Judge Faruqui declined to grant immediate access to Binance.US’s software. The judge stated that he was not inclined to allow the inspection at this time. The hearing aimed to address the SEC’s motion to compel Binance to provide extensive information and make its executives more accessible for depositions, which had been a contentious issue between the two parties in recent weeks.

Judge Faruqui proposed an alternative approach, suggesting that the SEC should formulate more specific discovery requests and engage with a broader range of witnesses. This decision was reported by Bloomberg on September 18. The SEC had previously encountered difficulties in obtaining information from Binance.US since it initiated legal action against the American branch of the cryptocurrency exchange, as well as its international affiliate Binance Holdings Ltd and CEO Changpeng “CZ” Zhao, on June 5. The lawsuit pertained to the alleged sale of unregistered securities.

On September 15, the SEC accused Binance.US of non-cooperation in the investigation, noting that Binance.US’s parent company, BAM Trading, had produced only 220 documents during the discovery process. Many of these documents were described as “unintelligible screenshots and documents without dates or signatures” by the SEC. Furthermore, the regulator asserted that BAM had refused to provide essential witnesses for deposition, agreeing only to four depositions involving individuals it deemed appropriate.

Binance, on the other hand, had characterized the SEC’s repeated discovery requests as “unduly burdensome,” while the SEC maintained that Binance was uncooperative despite agreeing to a consent order on discovery in the SEC’s case against it for unregistered securities operations and other allegations. Judge Faruqui’s decision not to grant the SEC immediate access to Binance.US’s software and related documentation represents a partial setback for the regulator in its ongoing case against the exchange.

One of the SEC’s key concerns in its investigation of Binance.US is the custody of customer assets, with the regulator asserting the need for a more thorough examination of potential links between Binance.US and the global arm of the exchange.

Image by vectorpouch on Freepik

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