SEC Supports Motion to Compel in Legal Battle Against Binance
In the ongoing legal dispute between the US Securities and Exchange Commission (SEC) and Binance, the SEC has filed a strong response supporting its Motion to Compel. The SEC highlights the concern over the increasing number of employees leaving Binance, who may have important information about asset custody and control.
SEC Raises Alarm Over Employee Exodus At Binance
The SEC filing points out that Binance.US’s opposition to the motion demonstrates the “complexities” the SEC has faced in this case. Despite initially agreeing to expedited discovery provisions, Binance is now trying to reassess its scope and purpose, according to the SEC. The SEC argues that Binance.US’s representations have been contradicted by their documents and inconsistent statements, necessitating actual evidence through expedited discovery.
The SEC accuses BAM, Binance.US’s parent company, of providing inconsistent information, delaying document production, and obstructing access to relevant information regarding customer asset custody. Recent depositions reveal that BAM failed to search for or withheld responsive documents without justification. Additionally, the SEC highlights the urgency of expedited discovery due to the increasing number of Binance.US employees leaving, including the CEO, who may possess crucial information about asset custody.
Allegations Of Withholding Relevant Documents
The SEC firmly asserts that Binance.US has not fulfilled its discovery obligations in response to the SEC’s requests for production and interrogatories. Witnesses have identified relevant documents that were not produced despite BAM claiming otherwise. The SEC also finds Binance’s refusal to search for communications “unreasonable” despite testifying their existence. The SEC seeks an order compelling BAM to produce documents and communications regarding wallet custody software and related services.
The SEC argues that BAM’s limited discovery fails to provide credible explanations for its crypto asset wallet custody arrangements and its relationship with Binance. The SEC believes that Binance’s control over BAM for its own unlawful purposes is well-documented. Expedited discovery is necessary to ensure the safety and availability of BAM customers’ assets throughout the litigation process.
Potential Consequences for Binance
If the court grants the SEC’s motion to compel, Binance could face increased scrutiny and an extensive investigation into its operations and potential securities law violations. The company may be required to disclose sensitive information, including documents related to its wallet custody software and relationships with entities like Binance Holdings Limited (BHL). Any violations uncovered during the investigation could lead to penalties, fines, and potential legal action.
Hot Take: Binance faces further trouble as the SEC supports its Motion to Compel in the legal battle. The SEC emphasizes concerns over employee departures, inconsistent information provided by Binance.US, and the need for expedited discovery. If the court grants the motion, Binance could face increased scrutiny and potential consequences for violating securities laws.
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