Key Takeaways
- Binance argues that the SEC has failed to present any evidence supporting its allegations that customer assets have been misappropriated.
- Binance has called the SEC’s requests as “unreasonable” and “unduly burdensome.”
In a significant development in the ongoing legal feud between Binance.US and the United States Securities and Exchange Commission (SEC), attorneys representing BAM Trading Services, the operator of the Binance.US cryptocurrency exchange, have filed sealed documents in opposition to the SEC’s motion to compel. This move comes as Binance.US characterizes most of the SEC’s requests as “unreasonable” and “unduly burdensome.”
The heart of the matter revolves around the SEC’s demands for production and interrogatories, which Binance.US contends are “overly broad” and extend “beyond the scope of the consent order.” The legal team for BAM argues that the SEC’s requests, including depositions of BAM’s CEO, Brian Shroder, and CFO, Jasmine Lee, are simply “unreasonable” in nature. They emphasize that neither Shroder nor Lee possess unique knowledge concerning the day-to-day management details related to the custody and transfer of customer assets at Binance. US.
BAM’s legal representatives make a strong case for their stance by highlighting that the cryptocurrency exchange has offered numerous other witnesses who could provide more substantial insights into its operations. This includes BAM’s Chief Information Security Officer, Erik Kellogg. The attorneys contend that the burden imposed by deposing Shroder and Lee outweighs any potential benefits and that the SEC’s pursuit of discovery is disproportionate to the needs outlined in the consent order.
Furthermore, the lawyers argue that the SEC has failed to present any evidence supporting its allegations that customer assets have been misappropriated. They describe the SEC’s allegations forming the basis for its motion to compel as “misleading and mistaken.”
One noteworthy aspect of BAM’s response is the assertion of a “complete disconnect” between the SEC’s “overbroad and abusive approach” and the limited expedited discovery that both parties had agreed upon in the consent order. This statement underscores BAM’s belief that the SEC has exceeded its boundaries with its extensive demands.
This latest development comes after an agreement between the SEC and Binance to file a protective motion on September 11. This joint motion stipulates that confidential information will be filed under seal, with restricted access granted only to specific parties, including the judge, attorneys, plaintiffs, and defendants.
In June, the SEC sued Binance’s U.S. and global entities, alongside its CEO Changpeng “CZ” Zhao, alleging that they had operated an unregistered securities exchange by allowing people to trade crypto.
