Binance and SEC Clash Continues Over Evidence Production and Witness Examination
Summary:
The legal battle between Binance and the US Securities and Exchange Commission (SEC) continues, with disputes centering on evidence production and witness interrogation. While the SEC requests comprehensive proof from Binance's parent company BAM, the latter claims to have satisfied all requirements stipulated in the Consent Order and asserts that the SEC's investigation should be confined to verifying customer asset safety. A sticking point remains the potential examination of Binance's co-founder Changpeng Zhao, who stepped down as CEO in a $4.3 billion settlement with US regulators and faces a sentencing on February 23, 2024.
The ongoing conflict between Binance and the US Securities and Exchange Commission (SEC) over evidence presentation and witness stands in the regulatory body's case against the cryptocurrency exchange is highlighted in court records. As per a joint status report submitted on January 25, the SEC argues that there remain significant elements of discovery from BAM Trading Services - the parent entity of Binance.US - that are still pending. In the lawsuit, the SEC's demands for proof from Binance have been comprehensive, igniting disputes particularly about asset custody and liquidity. The regulatory body is searching for proof that Binance.US had a covert access to manipulate customer assets akin to FTX.
Legal representatives of BAM argue that they have met all the prerequisites for document submission as spelt out in the Consent Order and expedited retrieval request, urging the court to affirm that all obligations from BAM's end are fulfilled. At this juncture, the view from BAM is that it has gone beyond what can be reasonably expected to meet its responsibilities under the Consent Order. They request that the court acknowledge their extensive cooperation, particularly given the damage and strain inflicted by the SEC's TRO and approach to expedited discovery during the past seven months.
The Consent Order is a legal contract detailing the boundaries of the SEC's investigative rights. BAM challenges the extent of the SEC's inquiry, arguing it should be restricted to verifying that customer assets are safeguarded and accurately accounted for. They claim the regulator has overstepped by conducting a sweeping probe into BAM's policies, procedures, and practices related to asset custody, both present and past.
A contentious point in the lawsuit is the interrogation of witnesses. Notably, the document mentions pending requests to examine "BAM's previous CEO and CFO", likely referring to Brian Shroder and Jasmine Lee. "BAM doesn't believe the SEC is warranted in obtaining any further depositions from current or former BAM personnel as the SEC has already questioned a number of witnesses during expedited discovery," it reads.
BAM's lawyers and those of the SEC are also exploring the possibility of calling upon Binance's co-founder Changpeng Zhao, though differences over the extent, timing, location, and quantity of depositions persist. Zhao stepped down from his role as Binance's CEO in November 2023 in line with a $4.3 billion settlement reached with US regulatory bodies. His hearing is slated for February 23, 2024, while the next status report on the matter is due by February 15. Currently, Zhao is out on a $175 million bond in the US, facing up to 18 months of incarceration.
Published At
1/26/2024 8:20:00 PM
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