In the ongoing case on Tuesday the SEC faced a temporary setback as a federal magistrate judge rejected its plea for immediate access to Binance.US’s software. This development came to light during a recent hearing, primarily focused on the SEC’s motion to compel Binance to provide extensive information and make its executives available for depositions.
Judge Faruqui’s Reluctance
According to the Bloomberg report, during the trial, Judge Faruqui hesitated to give the SEC Binance.US’s software. He suggested the SEC make its discovery requests more specific and include more witnesses. The SEC sued Binance.US, its international affiliate Binance Holdings Ltd, and CEO Changpeng “CZ” Zhao on June 5, claiming it had trouble getting necessary information from Binance.US.
SEC’s Claims Non-coperation by Binance.US
The SEC claimed that Binance.US sold unregistered securities to American clients, thus they needed to speed up discovery. The SEC charged Binance.US with non-cooperation on September 15. It especially mentioned Binance.US’s holding firm, BAM Trading, which supplied only 220 papers during discovery, many of which were incomprehensible or missing dates and signatures. BAM Trading only agreed to four suitable witness depositions and refused to submit important witnesses.
Binance’s Response to Documents
Binance countered the SEC’s accusations, arguing that the repeated discovery requests were excessively burdensome. On this, Matthew Martens, the lawyer representing Binance.US, said that the company has answered every specific request from the SEC. However, he criticized what he called unreasonable document requests from the government.
Impact of the Denial
The denial of immediate access to Binance.US’s software and documentation signifies a partial setback for the SEC in its ongoing legal battle with the exchange. The central concern of the SEC pertains to the custody of Binance.US customer assets and potential links to the global arm of the exchange.
Notably, as the SEC’s dispute with Binance.US escalates, trading volume hit a severe low of $5.09 million. Since the SEC filed its complaint in June, Binance.US lost banking support, suspended US dollar deposits, and underwent a series of layoffs, including the departure of former CEO Brian Shroder and the downsizing of a third of its remaining workforce.
Binance.US halted trading for over 100 token pairs following the SEC’s lawsuit.