Judge Encourages Collaboration Between Binance.US and SEC
A US judge has declined to order Binance.US to produce its executives for questioning or to compel the SEC to withdraw its request for more documents. Instead, Magistrate Judge Zia Faruqui has urged both parties to work together on the discovery process. The judge advised the SEC to narrow its information request but allowed it to depose certain shareholders and investigate the safety of Binance.US’s funds. Furthermore, he instructed Binance.US to share additional information about its relationship with Ceffu, a custody platform and service provider.
The SEC’s Case Against Binance.US
The SEC’s case centers around concerns about Ceffu and its connection to Binance Global Holdings Limited. The commission alleges that the custodian is too closely linked to Binance, in violation of an agreed-upon order. The order mandates that Binance.US and BAM Trading, its parent company, store all US customer funds in wallets accessible only by US personnel. The SEC also claims that this arrangement was used to move customer funds out of the country, against the terms of the order. Consequently, the SEC wants access to Binance.US’s documents and communications with its wallet custody providers.
Attorney Objects to Broad Request for Documents
Binance.US’s legal representative from Wilmer Hale, Matthew Martens, argued that the SEC’s document request was overly broad and impossible to fulfill. He stated that investigating how the software works is irrelevant to the case. However, Judge Faruqui made it clear that Binance needed to provide more information about its current custody solution and expressed doubts about BAM’s control over its assets. The judge emphasized that the SEC required extensive information about Binance.US’s wallet arrangement because they were unaware of what they didn’t know.
Judge’s Ruling and SEC Lawsuit
In the end, the judge rejected the SEC’s request for an inspection. The commission had filed a lawsuit against Binance and its founder, Changpeng Zhao, accusing them of operating an unlicensed securities exchange. As a result, the SEC has been focused on ensuring that US customer assets remain within the United States.
Hot Take: Collaboration is Key in the Binance.US and SEC Dispute
In the ongoing legal battle between Binance.US and the SEC, Judge Zia Faruqui has emphasized the importance of collaboration. Instead of making a ruling, he urged both parties to work together on their discovery requests. This approach demonstrates a desire to keep things moving while ensuring that relevant information is shared. The SEC’s case against Binance.US revolves around concerns about its custody platform, Ceffu, and alleged violations of an agreed-upon order. Binance.US’s legal representative objected to the broad nature of the SEC’s document request. Ultimately, the judge rejected the SEC’s plea for an inspection. As this dispute continues, collaboration between Binance.US and the SEC will be crucial in reaching a resolution.
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