- Binance.US has filed a complaint against the U.S. SEC due to many extra demands from the regulator.
- The crypto firm has termed these demands as unduly burdensome, arguing that there is no extra evidence left to be found.
- It is a wait-and-see how the regulator will respond to these allegations.
As soon as Binance and SEC agreed on a joint motion to file confidential information under seal, the crypto firm filed a complaint that the regulator’s court requests were unnecessarily burdensome.
Binance.US made this response through its attorney by filing a sealed document in opposition to the U.S. SEC seeking additional details from the crypto firm.
BAM Trading Services which operates the Binance.US cryptocurrency exchange has protested at the SEC’s request for production and interrogatories, stating that they were overly broad, unduly burdensome and beyond the consent order. From this argument, it may seem BAM is feeling overwhelmed by unreasonable demands.
BAM’s attorneys mentioned specific demands such as the SEC’s demand for certainty, as well as the requests for depositions of BAM CEO Brian Shroder and chief financial officer Jasmine Lee were not reasonable.
Binance.US’s lawyers further argued that the CEO and CFO had no unique knowledge regarding the specific topic which had been captured in the consent order’s expedited discovery provision. The lawyers argued that they had made a better proposition as to who was better placed to provide better insights. The person suggested was BAM’s chief information security officer Erik Kellogg.
The crypto firm lawyers added that the regulator lacks solid evidence to support what they termed as “ unsubstantiated allegations” in reference to SEC’s claim that Binance.US had diverted customers’ assets. They referred to the allegations as “misleading and mistaken”
There is no evidence of SEC’s allegation
The BAM’s lawyers said in the filing that “SEC has no evidence that BAM customer assets have been dissipated, commingled, or misused in any way”. Adding that since June 13th, they have submitted verified accounting demonstrating that all customer assets are fully accounted for, produced over 5,000 pages of documentary discoveries, answered 19 interrogatories, and made multiple employees available for depositions, including its Chief Information Security Officer (“CISO”).
The defendants further stated that as required by the Consent Order, BAM had confirmed in writing that it would maintain custody and control its customers; assets during the pendency of the case and would not transfer any assets to the defendants Binance Holdings Limited (“BHL”), Changpeng Zhao, or their affiliates. BAM also agreed that it would maintain exclusive control over all Private and Administrative Keys related to its customer assets through personnel in the United States.
BAM’s compliance with these provisions of the Consent Order was signed by BHL and Mr. Zhao and they did not have control over any Private and Administrative Keys associated with BAM’s customer assets.
The defendants filed the following objections
“Instead of focusing on the “limited” issues permitted by the Consent Order—namely, to confirm customer assets were safe and accounted for—the SEC has continued to seek ever-expanding discovery over all aspects of BAM’s current and historical custody policies, procedures, and practices, including noticing over a dozen depositions and issuing expansive demands for electronic communications.”
BAM’s response came soon after the plaintiff and the defendants submitted the joint motion on Sept. 11, pledging to file confidential and non-public information as protected materials, restricting access to parties such as judges, plaintiffs and defendants.
The complaints from the defendant seem genuine, so it will be very interesting to see what SEC files in response.
