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Binance and SEC Dispute Escalates Over Evidence Production – Crypto News

Published

1 year ago

January 27, 2024

Dripp

In the ongoing legal confrontation between Binance and the United States Securities and Exchange Commission (SEC), recent court documents have highlighted a significant escalation. The dispute centers on the production of evidence and witness depositions, with both parties presenting contrasting stances on the scope and nature of the investigation.

Intensifying Legal Battle Over Discovery

The SEC has been rigorously pursuing evidence from Binance in a case that has raised critical questions about the crypto exchange’s handling of customer assets. According to a joint status report filed on January 25, the SEC alleges that BAM Trading Services, the parent company of Binance.US, has not fully complied with its requests for information. This includes detailed inquiries into the custody and liquidity of assets, prompted by concerns that Binance.US may have had undisclosed control mechanisms over customer funds akin to those found in the FTX scandal.

BAM’s attorneys, however, maintain that the company has adhered to all document production requirements as mandated in the consent order and the expedited recovery request. They argue that the SEC’s approach, including its Temporary Restraining Order (TRO) and methods of expedited discovery, has unduly burdened BAM.

The consent order, a legal framework governing the SEC’s investigation, is now a point of contention. BAM contends that the SEC is overstepping the agreed terms, extending its probe beyond the safety and accounting of customer assets to include a broad examination of BAM’s custody policies and practices.

Binance Disputes SEC’s Witness Examination Requests

A significant aspect of the dispute involves the examination of key witnesses. The report mentions pending requests for depositions from BAM’s former CEO and CFO, likely to Brian Shroder and Jasmine Lee. BAM’s stance is that additional depositions from its current or former personnel are unwarranted, citing that the SEC has deposed numerous witnesses during the expedited discovery phase.

The potential examination of Binance co-founder Changpeng Zhao is another contentious issue. Disagreements persist regarding the specifics of Zhao’s deposition, such as its scope, timing, and location. Zhao, who stepped down as CEO of Binance in November 2023 following a $4.3 billion settlement with U.S. regulators, is currently on a $175 million bond in the United States. His sentencing is scheduled for February 23, 2024, adding another layer of complexity to the case.