- SEC’s Bid to Probe Binance.US Software Hits a Roadblock as Judge Seeks Clarity
- Federal Magistrate Judge Zia Faruqui expressed his reluctance to grant permission for the inspection at this moment.
In a legal showdown, a US federal magistrate judge has thwarted the Securities and Exchange Commission’s (SEC) attempt to investigate Binance.US software, urging the regulator to refine its requests.
The judge, currently unconvinced, declined the inspection request, indicating a need for more specificity. The SEC and Binance find themselves in a fierce struggle, with the SEC demanding precise information and access to company executives for depositions.
During a recent court hearing, the SEC petitioned a federal magistrate judge to greenlight an examination of Binance US’s technical infrastructure and compel the release of other requested data in the ongoing case against the exchange.
However, Federal Magistrate Judge Zia Faruqui declined the inspection request for now, suggesting that the SEC should formulate more tailored inquiries and engage additional witnesses.
The SEC’s legal battle against Binance.US, its global affiliate Binance Holdings Ltd., and CEO Changpeng Zhao has been ongoing since June, marked by difficulties in securing essential information. The SEC had initially sought approval from a federal magistrate judge to scrutinize the company’s technological backbone and compel the disclosure of requested data. The courtroom drama continues to unfold!
Ceffu, previously known as Binance Custody and rebranded earlier this year, has come under intense scrutiny. The SEC suspects that it has functioned as a link between Binance US and Binance Holdings, potentially enabling the movement of US customer funds abroad.
Although the request for a software inspection to ascertain Ceffu’s involvement in these alleged unlawful transfers was denied by Judge Faruqui, it’s doubtful that the SEC will be dissuaded.
The SEC and Binance.US have been locked in a dispute over document production and deposition requests, with Binance.US contending that the SEC’s demands are excessively expansive. The SEC revealed that the company has furnished less than 250 documents and made available only three witnesses for deposition.
Judge Zia Faruqui’s decision marks a momentary procedural setback for the SEC in this high-profile cryptocurrency case. A hearing has been scheduled for October 12, and both parties are required to submit a joint status report by October 10, signaling that the legal battle is far from concluded.