A federal magistrate judge has rejected the SEC’s immediate access request to Binance.US’s software, urging the regulatory body to provide more precise discovery requests.
In a setback for the United States Securities and Exchange Commission (SEC), a judge declined to grant immediate access to Binance.US’s software during a September 18 hearing, stating he isn’t “inclined to allow the inspection at this time.”
The hearing focused on the SEC’s motion to compel Binance to provide extensive information and increase the accessibility of its executives for depositions—a point of contention in recent weeks.
Judge Faruqui, during the hearing, suggested that the SEC should formulate more specific discovery requests and engage with a broader spectrum of witnesses, as reported by Bloomberg on September 18.
Challenges have arisen for the SEC in obtaining information from Binance.US since filing a lawsuit against the crypto exchange’s American branch, Binance Holdings Ltd, and CEO Changpeng “CZ” Zhao on June 5, alleging their involvement in the sale of unregistered securities.
On September 15, the SEC accused Binance.US of non-cooperation in the investigation, emphasizing that Binance.US’s parent company, BAM Trading, had provided only 220 documents during the discovery process.
A significant portion of these documents, according to the SEC, comprises indecipherable screenshots and documents lacking dates or signatures. The regulatory body further stated that BAM has declined to produce crucial witnesses for depositions, opting for just four depositions of individuals it deemed suitable.
In contrast, Binance has previously characterized the SEC’s repeated discovery requests as overly burdensome, while the SEC contended that Binance is uncooperative despite previously agreeing to a consent order on discovery in the SEC’s case against it, involving allegations of unregistered securities operations and more.
Judge Faruqui’s decision to deny the SEC immediate access to Binance.US’s software and related records represents a partial setback for the regulator in its ongoing legal battle against the exchange.
One of the central concerns for the SEC regarding the crypto exchange revolves around the custody of Binance.US customer assets. The regulator asserts that Binance.US requires a more thorough investigation to uncover potential connections to the global branch of the exchange.
Just recently, CZ addressed the speculations around Binance, affirming that the crypto market has evolved significantly over the past two years and is now confronting a more adversarial regulatory environment. In his opinion, Norman Reed, the new CEO of Binance.US, is the right leader to guide the U.S. exchange through this new era.
