Binance, the world’s largest cryptocurrency exchange, has filed a motion requesting a protective order against the United States Securities and Exchange Commission (SEC), claiming it has fully cooperated with the regulator so far. The crypto company argues that some of the SEC’s deposition and discovery requests are outside the scope of its current inquiry.
SEC Is Conducting A Fishing Expedition, Binance Says
On Monday, August 14, BAM Trading – the company behind Binance.US – submitted a motion seeking a protective order against the Securities and Exchange Commission in what it claims to be a “fishing expedition” from the financial regulator.
The crypto company wrote in the court filing:
BAM has worked in good faith, but the SEC has been steadfast in its belief that the Consent Order gives it carte blanche to investigate every aspect of BAM’s asset custody practices without any discernible limitation whatsoever.
BAM mentioned that the SEC has refused proposals to “meaningfully limit” its requests. The company called the SEC’s approach “unreasonable and part of a broader pattern” of the regulator misusing the discovery provision of the Consent Order.
In the court filing, BAM also claimed that the SEC is demanding that it provides “all communications” as far back as November 2022 on dozens of topics – many of which do not concern customer assets.
BAM also raised the issue of the SEC demanding depositions of its most senior executives (including its CEO Changpeng Zhao) even though they do not have firsthand knowledge about the facts on the security, custody, and transfer of customer assets. The crypto company seemed to find this puzzling, especially as it had already offered four witnesses for depositions.
In the end, BAM asked the court to issue a protective order limiting the SEC to four depositions of BAM employees, precluding the SEC from questioning witnesses during depositions on matters outside the scope of the Consent Order, preventing the deposition of BAM’s CEO and CFO, and blocking requests for communications on various topics.
“No Evidence Suggesting That Customer Assets Were Misused”
In June, the Securities and Exchange Commission sued Binance, BAM Trading, and CEO Changpeng Zhao for allegedly violating the country’s securities laws. The regulator accused the crypto exchange and Zhao of misleading investors while commingling and diverting customers’ assets.
In response to the SEC’s allegations of commingling customer assets, Binance claimed to maintain its clients’ fiat currency in segregated accounts held with its banking partners, and separate from corporate funds.
In the latest court filing, BAM maintained that customers’ assets are safe and secure. “Accordingly, the SEC already has the relief it wants — confirmation that BAM’s customer assets are safe, secure, and sufficient to cover any customer claims or liabilities,” it stated.
The crypto company also said that although the SEC has expressed its concerns otherwise, the regulator has yet to point out any evidence suggesting that customer assets were misused or dissipated in any way.
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