Binance.US, the US branch of the world’s largest cryptocurrency exchange, Binance, filed a petition with the US Securities and Exchange Commission (SEC) on August 14 for a protective order against the regulator. The petition claims that the SEC’s requests for communication with the company are overly broad and burdensome.
Binance Accuses SEC of “Fishing” Charges
BAM Trading and BAM Management, the parent companies of Binance.US, filed a petition with the court for a protective order regarding the SEC’s statement filings and discovery requests. The petition highlights that the SEC refused to reasonably limit BAM’s offers or requests, stating that “SEC’s approach is unreasonable and part of a broader pattern of abuse of the discovery provision of the Consent Order.”
BAM stated that it has provided testimony from four witnesses, including two witnesses who are best positioned to address questions regarding the custody and security of customer assets. They added, “As a result, the SEC waits, hoping to catch fish by casting a wide net instead of engaging in a limited and ‘narrowly tailored’ discovery aimed at ensuring that customer assets are already secure and accessible as authorized by the Consent Order.”
BAM requested the court to issue a protective order limiting the SEC to taking up to four depositions from the company’s employees and preventing the regulator from questioning witnesses on matters outside the scope of the consent order and blocking the depositions of BAM’s CEO and CFO.
Legal Problems Faced by Binance
The US federal regulator filed a lawsuit against Binance and its CEO, Changpeng Zhao (CZ), in early June, alleging that the cryptocurrency exchange had deceived customers and violated the country’s securities laws by using customer funds in a separate investment fund owned by CZ. Binance claimed that customers’ fiat funds were held in separate accounts with banking partners and separate from any corporate funds. The company acknowledged that CZ had access to BAM Trading’s bank accounts but denied having signature authority over those accounts.
In the petition filed on August 14, BAM also stated that it wants to confirm to the SEC that there are sufficient funds to ensure the safekeeping and fulfillment of any customer’s funds or obligations. BAM added, “While the SEC has otherwise expressed its ‘concerns,’ it has not identified any evidence demonstrating that customer assets have been misused or transferred in any way.”
