Binance.US disagrees SEC's "Unreasonable" Data Requests

Binance.US disagrees SEC’s “Unreasonable” Data Requests

Time Stamp: September 12, 2023 9:49 AM
Source Node: 2877109

Binance.US,
the U.S. arm of the global cryptocurrency exchange, has responded strongly to
the United States Securities and Exchange Commission (SEC) in an ongoing legal
dispute. The exchange’s attorneys has filed sealed documents today on September 12
opposing the SEC’s motion to compel, deeming many of the SEC’s demands “unreasonable” and “unduly burdensome.”

In
their opposition, BAM Trading Services, which operates Binance.US, asserted that the SEC’s requests for information
and interrogatories were overly broad and beyond the scope of the consent
order. They argued that the SEC’s insistence on obtaining detailed information
and conducting depositions of BAM’s CEO, Brian Shroder and the CFO, Jasmine Lee was unreasonable.

BAM’s
legal team contended that Shroder and Lee had no unique knowledge regarding the
custody and transfer of customer assets at Binance.US, making their depositions
unnecessary. They also pointed out that other witnesses, such as BAM’s Chief
Information Security Officer, Erik Kellogg could provide more insight into the
exchange’s operations.

The
attorneys emphasized that the burden imposed by these depositions outweighed
any potential benefit. The requested discovery was disproportionate to the
needs specified in the consent order.

Lack of Evidence: BAM Contests
SEC’s Assertions on Asset Diversion

BAM
challenged the SEC’s allegations that customer assets had been diverted,
stating that the SEC had “no evidence to
support its unsubstantiated allegations.” They described the SEC’s claims
as misleading and mistaken.

BAM’s
response comes following a joint motion, agreed by both Binance and the
SEC, to file confidential information under seal. This agreement, made on
September 11, restricts access to certain material, allowing only the judge,
attorneys, plaintiffs, and defendants to view confidential and non-public
information.

Navigating Legal Challenges:
Binance’s Ongoing Battle with U.S. Regulators

Finance Magnates reported in mid-August that an
ongoing legal battle between Binance’s entities and the SEC, a federal judge
has referred the matter to the magistrate court. The SEC had requested
information from Binance.US regarding user asset custody and security, which
the exchange deemed irrelevant to the case. Binance’s legal team previously
filed a protective order to counter what they viewed as the SEC’s excessive
data demands. This order aims to limit employee depositions to four and exclude
the CEO and CFO.

The
legal dispute began when the SEC accused Binance and its CEO of orchestrating
deceptive practices, including inflated trading volumes and the diversion of funds. To protect investors’ funds, there have been negotiations conducted while allowing the exchange to operate under regulatory supervision.

Amid
these legal challenges, Binance has experienced a decline in market share among
top-tier exchanges, falling from 80% to around 68% this year, according to
CCData.

The
legal battle between Binance.US and the SEC continues, with both sides firmly
entrenched in their positions, and makes it a closely watched case in the
cryptocurrency industry.

Binance.US,
the U.S. arm of the global cryptocurrency exchange, has responded strongly to
the United States Securities and Exchange Commission (SEC) in an ongoing legal
dispute. The exchange’s attorneys has filed sealed documents today on September 12
opposing the SEC’s motion to compel, deeming many of the SEC’s demands “unreasonable” and “unduly burdensome.”

In
their opposition, BAM Trading Services, which operates Binance.US, asserted that the SEC’s requests for information
and interrogatories were overly broad and beyond the scope of the consent
order. They argued that the SEC’s insistence on obtaining detailed information
and conducting depositions of BAM’s CEO, Brian Shroder and the CFO, Jasmine Lee was unreasonable.

BAM’s
legal team contended that Shroder and Lee had no unique knowledge regarding the
custody and transfer of customer assets at Binance.US, making their depositions
unnecessary. They also pointed out that other witnesses, such as BAM’s Chief
Information Security Officer, Erik Kellogg could provide more insight into the
exchange’s operations.

The
attorneys emphasized that the burden imposed by these depositions outweighed
any potential benefit. The requested discovery was disproportionate to the
needs specified in the consent order.

Lack of Evidence: BAM Contests
SEC’s Assertions on Asset Diversion

BAM
challenged the SEC’s allegations that customer assets had been diverted,
stating that the SEC had “no evidence to
support its unsubstantiated allegations.” They described the SEC’s claims
as misleading and mistaken.

BAM’s
response comes following a joint motion, agreed by both Binance and the
SEC, to file confidential information under seal. This agreement, made on
September 11, restricts access to certain material, allowing only the judge,
attorneys, plaintiffs, and defendants to view confidential and non-public
information.

Navigating Legal Challenges:
Binance’s Ongoing Battle with U.S. Regulators

Finance Magnates reported in mid-August that an
ongoing legal battle between Binance’s entities and the SEC, a federal judge
has referred the matter to the magistrate court. The SEC had requested
information from Binance.US regarding user asset custody and security, which
the exchange deemed irrelevant to the case. Binance’s legal team previously
filed a protective order to counter what they viewed as the SEC’s excessive
data demands. This order aims to limit employee depositions to four and exclude
the CEO and CFO.

The
legal dispute began when the SEC accused Binance and its CEO of orchestrating
deceptive practices, including inflated trading volumes and the diversion of funds. To protect investors’ funds, there have been negotiations conducted while allowing the exchange to operate under regulatory supervision.

Amid
these legal challenges, Binance has experienced a decline in market share among
top-tier exchanges, falling from 80% to around 68% this year, according to
CCData.

The
legal battle between Binance.US and the SEC continues, with both sides firmly
entrenched in their positions, and makes it a closely watched case in the
cryptocurrency industry.

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