The world’s largest cryptocurrency exchange Binance has sought court protection against what it perceives as overreaching discovery demands by the U.S. Securities and Exchange Commission (SEC).
The exchange filed a complaint on August 14, asserting that the SEC’s requests, based on a June court directive, have gone beyond their intended scope.
Binance’s complaint highlights:
“The SEC has not accepted Binance’s proposals to limit its requests. The SEC’s stance appears unreasonable and seems to be part of a larger trend where the SEC is misusing the discovery provisions of the Consent Order. This Order was meant for ‘limited expedited discovery’ focusing on specific topics, primarily the handling, protection, and accessibility of Binance customer assets.”
Binance argues that the SEC, leveraging the June order that granted the regulator insights into Binance’s handling and protection of customer assets, is now demanding a wide array of documents. Many of these, Binance contends, have minimal relevance to the protection of customer assets.
The exchange emphasizes its cooperative stance, stating that it has acted in good faith. However, it believes the SEC’s interpretation of the June directive is overly broad. Binance has even offered to present senior employees responsible for customer funds for depositions, an offer the SEC has yet to accept.
Binance’s complaint further notes:
“The SEC seems to be on a broad information-seeking mission rather than focusing on the specific, ‘limited’ discovery the Consent Order permits, which is to ensure the current safety and accessibility of customer assets. The SEC’s approach is deeply concerning and inappropriate.”
The protective order Binance is pursuing aims to restrict the SEC’s discovery scope. It suggests limiting depositions to a select group of exchange employees and excluding top executives. The order also seeks to ensure that the SEC’s questions remain within the boundaries set by the June directive, preventing wide-ranging inquiries not directly related to customer assets.
This move by Binance comes in the wake of the SEC’s June lawsuit against both Binance and its U.S. counterpart, Binance.US, over allegations of running an unregistered securities exchange. Additionally, Binance is grappling with scrutiny from the Commodity Futures Trading Commission, which alleges that Binance was aware of its non-compliance with CFTC regulations, yet actively sought to bypass them.
