Key Takeaways
- The exchange group had alleged that SEC’s current requests for data are overly broad and unduly taxing.
- Binance’s operating company BAM Trading and BAM Management’s protective order includes narrowing the scope of the SEC’s inquiries.
Cryptocurrency exchange Binance has taken a proactive step in its ongoing legal tussle with the U.S. Securities and Exchange Commission (SEC) by filing for a protective court order. This move, made late on Monday, aims to counter what Binance perceives as the SEC’s excessive and burdensome information requests.
In a court filing submitted to the U.S. District Court of Columbia, Binance’s operating company BAM Trading and BAM Management, highlighted that they had already furnished the regulator with substantial information. According to the exchange group, the SEC’s current requests for data are not only overly broad but also unduly taxing.
The central objective of the protective order is to narrow the scope of the SEC’s inquiries. This includes limiting the number of depositions from BAM employees to just four while simultaneously dropping the deposition requirement for the company’s Chief Executive Officer and Chief Financial Officer. The filing refrains from explicitly naming these individuals.
“BAM has worked in good faith, but the SEC has been steadfast in its belief that the Consent Order gives it carte blanche to investigate every aspect of BAM’s asset custody practices without any discernible limitation whatsoever,” the court filing stated.
The situation has escalated since June, when U.S. regulators launched a lawsuit against Binance and its CEO, Changpeng Zhao. The lawsuit brought forth a total of 13 charges, alleging a wide range of misconduct by the company. These included accusations of inflating trading volumes, mishandling customer funds, failing to prohibit U.S. customers from accessing its platform, and providing misleading information about its market surveillance controls.
Amid these proceedings, Binance and the SEC managed to reach an interim agreement in June that allowed the world’s largest cryptocurrency exchange to continue its operations in the United States while grappling with the ongoing fraud charges. At the heart of the matter was the SEC’s assertion that Binance had operated as an unregistered securities exchange, violating U.S. laws.
The crux of the SEC’s claims revolved around Binance’s alleged efforts, led by CEO CZ, to attract American customers to its unregulated international exchange. Furthermore, the SEC contended that Binance had mingled investor funds with its own and had transgressed securities laws.
Despite Binance’s recent motion for a protective order, the SEC appears to be resistant to the proposal, having declined earlier attempts by BAM to impose meaningful restrictions on its information requests.
