Binance, a leading cryptocurrency exchange, has taken legal action by requesting a protective order against the US Securities and Exchange Commission (SEC). The exchange accuses the regulatory body of engaging in a “fishing expedition” with its overly broad discovery requests.
In a court filing dated August 14th, Binance contends that it has diligently followed a June court order. However, the SEC’s discovery requests have been deemed excessive and unreasonable. The regulator has demanded access to “every single document in [Binance’s] possession related to customer assets.”
“BAM has worked in good faith, but the SEC has been steadfast in its belief that the Consent Order gives it carte blanche to investigate every aspect of BAM’s asset custody practices without any discernible limitation whatsoever,” the filing states.
The crypto firm also argued that the court should not allow the SEC “to take the depositions of [BAM Trading’s] CEO and CFO, BAM’s two most senior executives.”
“Deposing BAM’s CEO and CFO is unnecessary given that BAM has repeatedly offered depositions of senior employees with direct responsibility over and deep knowledge of the security, custody, and transfer of customer assets; would be unproductive given that BAM’s CEO and CFO have little, if any, knowledge concerning the core issues underlying the Consent Order; and would be disruptive to BAM’s business,” the firm reasoned.
Binance contends that it offered depositions from senior employees directly responsible for customer funds, an offer the SEC seemingly disregarded.
The June court order pertained to the discovery of Binance’s custody procedures, security protocols, and the availability of customer assets.
Binance argues that the SEC’s requests are unrelated to the concerns addressed in the lawsuit. The exchange emphasizes that it has already provided information about customer assets and challenges the SEC to provide evidence of any misuse.
Furthermore, Binance finds fault with the SEC’s demand for communication records dating back to November 2022 on numerous topics, many of which are unrelated to customer assets.
In June, the SEC filed a lawsuit against Binance and its US-based arm, Binance.US, alleging unregistered securities exchange operation and the sale of unregistered securities. The lawsuit also named Zhao as a “controlling person” in the complaint.
Separately, Binance faces legal action from the Commodity Futures Trading Commission, which the exchange is actively attempting to dismiss.
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