SEC Faces Setback in Quest for Binance.US Software Access


The ongoing legal battle between the United States Securities and Exchange Commission (SEC) and crypto exchange Binance.US took an interesting turn on Monday, as Judge Faruqui delivered a significant setback to the SEC’s efforts, according to a recent report.

The SEC had sought immediate access to Binance.US’s software, aiming to compel the exchange to provide detailed information and make its executives available for depositions. However, the judge’s decision indicates that the regulatory agency will need to revise its approach in this contentious case.

The SEC’s Ongoing Struggle for Information

The SEC’s lawsuit against Binance.US, its international affiliate Binance Holdings Ltd, and CEO Changpeng “CZ” Zhao, filed in June, revolves around allegations of their involvement in the sale of unregistered securities. 

Since the initiation of the legal proceedings, the SEC has consistently claimed that it has encountered obstacles in obtaining crucial information from Binance.US. On September 15th, the SEC publicly accused Binance.US of noncooperation during the investigation. 

The regulator emphasized that Binance.US’s holding company, BAM Trading, had produced a mere 220 documents during the discovery process. Notably, a substantial portion of these documents “consist of unintelligible screenshots and documents without dates or signatures,” according to the SEC.

Additionally, the regulator pointed out that BAM Trading had refused to make essential witnesses available for deposition, opting instead for only four depositions of witnesses they deemed suitable.

Binance’s Response

In response to the SEC’s allegations, Binance called the regulatory body’s repeated requests for discovery “unduly burdensome.” Binance claims that the SEC is making unreasonable requests, potentially causing severe interruption to company operations.

Surprisingly, the SEC has countered Binance’s characterization of events by pointing out that Binance had initially agreed to a consent order on discovery in the SEC’s case against it for unregistered securities operations and other allegations. The SEC argues that this agreement demonstrates a level of cooperation that Binance is now failing to uphold.

Interpretation of the Judge’s Decision

Judge Faruqui’s decision to deny immediate access to Binance.US’s software suggests a cautious approach. While this may be seen as a setback for the SEC in the short term, it also highlights the judge’s commitment to ensuring a fair and balanced legal process. 

It is essential to strike a balance between the regulator’s need for information and the exchange’s right to due process.

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