Judge Denies SEC Request To Probe Binance.US: “We Need More”

The United States Securities and Exchange Commission (SEC) faced a setback in its pursuit of immediate access to Binance.US’s software, as the presiding judge expressed reluctance to grant such access during a hearing held on September 18. This hearing revolved around the SEC’s motion to compel Binance to provide detailed information and facilitate depositions with its executives, a contentious issue between the two parties over the past week.

Judge Zia Faruqui, in his remarks during the hearing, stated that he was not inclined to permit the inspection at this time. Instead, he suggested that the SEC should formulate more specific discovery requests and engage with a broader range of witnesses.

“I’m not going to order from the bench right now that they produce or not produce things. Let’s continue to try to work this out. I just want to keep things moving,” the judge said.

The SEC has consistently voiced its difficulties in obtaining information from Binance.US since it initiated legal action against the American branch of the cryptocurrency exchange, along with its international affiliate Binance Holdings Ltd and CEO Changpeng “CZ” Zhao, on June 5. The SEC’s lawsuit alleged the involvement of Binance in the sale of unregistered securities.

On September 15, the SEC accused Binance.US of noncooperation in the investigation, citing the inadequate production of documents by Binance.US’s holding company, BAM Trading, which consisted largely of unintelligible screenshots and documents lacking dates or signatures. Additionally, BAM had been reluctant to provide essential witnesses for deposition, agreeing to only four depositions of witnesses it deemed appropriate.

Binance had previously characterized the SEC’s repeated discovery requests as “unduly burdensome,” while the SEC contended 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 immediate access to Binance.US’s software and other documentation represents a partial setback for the SEC in its ongoing case against the exchange. Central to the SEC’s concerns is the custody of Binance.US customer assets, with the regulator asserting the need for a more thorough investigation to uncover potential links to the global arm of the exchange.

The SEC’s main objective is to ascertain the safety of customer funds held by Binance.US and gain more insight into its relationship with its service provider, Ceffu.

During the latest hearing, the judge requested Binance to provide additional information about its current custody solution, expressing doubts about BAM’s total control over their assets. He emphasized the need for more comprehensive information, stating, “I think we need more than we’ve got right now.”

Recently, Binance.US CEO Brian Shroder left his position amidst a series of significant changes at the company, including a workforce reduction of over 100 employees. This move follows a previous round of layoffs in June and the company’s shift toward becoming a crypto-only exchange. The firm has attributed its challenges to the ongoing regulatory scrutiny by the SEC.

“The SEC’s aggressive attempts to cripple our industry and the resulting impacts on our business have real-world consequences for American jobs and innovation, and this is an unfortunate example of that,” the firm said in a statement.

Information for this briefing was found via Inside Coin Telegraph, Watcher.Guru, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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