Binance Takes Action in Ongoing SEC Legal Battle
Binance, a prominent cryptocurrency exchange, has filed for a protective order against the U.S. Securities and Exchange Commission (SEC), citing what it perceives as a regulatory “fishing expedition.”
This latest development comes as Binance seeks to address the SEC’s discovery requests that appear to stretch beyond the boundaries initially defined by the regulator’s lawsuit against the exchange.
In an official court filing on August 14, Binance put forth its case, contending that its cooperation with the SEC has been conducted in good faith. However, the exchange expressed concern over the SEC’s extensive discovery demands, characterized by the request for “every single document in [Binance’s] possession related to customer assets.”
Binance raised objections, deeming these requests overly broad and lacking a clear nexus to the core issues underpinning the ongoing legal dispute.
Previously, a court order in June had granted the SEC authority to investigate specific aspects of Binance’s operations. This included custody practices, security protocols, and customer asset availability.
Crypto Platform Emphasizes Asset Custody Irrelevance in SEC’s Discovery Requests”
The crypto platform, however, maintains that the asset custody practices targeted in the SEC’s discovery requests were not central to the initial lawsuit’s primary focus on alleged violations related to securities exchange activities.
Amidst these contentions, Binance asserted its willingness to cooperate and provide pertinent information pertaining to customer assets. Notably, the exchange emphasized that the SEC has not furnished evidence of any customer asset misuse.
The platform expressed its unease at the SEC’s extensive demands, which even encompassed communications dating back to November 2022, spanning beyond customer assets.
Binance further underscored that its senior executives lack singular, firsthand knowledge concerning the intricacies of asset security, custody, and transfer. The exchange highlighted its offer to facilitate depositions of senior employees directly overseeing customer funds, an overture that seemingly went unnoticed by the SEC.
The protective order is to narrow the scope of the SEC’s investigative ambit. It aims to restrict depositions to four designated exchange employees, excluding key figures such as CEO Zhao Changpeng. Additionally, the order strives to curtail the SEC’s line of questioning beyond the confines of the original court order and to cease requests for communication records related to topics unrelated to customer assets.
This legal encounter between Binance and the SEC emanates from allegations of operating an unregistered securities exchange and engaging in the sale of unregistered securities. Notably, Binance’s founder, CZ, has been identified as a “controlling person” in the SEC’s official complaint.
Concurrently, Binance faces a distinct lawsuit from the Commodity Futures Trading Commission (CFTC), an action that Binance is actively seeking to have dismissed.