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Leading cryptocurrency exchange Binance recently filed a protective order against the enforcement action levied by the United States Securities and Exchange Commission (SEC). Commenting on this, former SEC Chief John Reed Stark opined that there is a “discovery storm brewing” between both parties from both parties’ current moves
Binance Went on the Offensive Against SEC
The U.S. arm of the crypto exchange Binance Holdings, together with some other associates like BAM Trading Services Inc. and BAM Management U.S. Holdings Inc. requested that the court limit the SEC to four depositions of BAM employees.
They also asked that the court preclude “the SEC from questioning witnesses during depositions on matters outside the scope of the Consent Order.”
What Will Likely Happen Regarding Binance’s Recent Motion for a Protective Order In The SEC/Binance Case
There’s clearly a discovery storm brewing between the SEC and Binance. Among other gripes, the U.S. arm of crypto exchange Binance Holdings is fighting an attempt by the U.S.… pic.twitter.com/LzTjsMeMWp
— John Reed Stark (@JohnReedStark) August 16, 2023
The request for precluding depositions was also requested for BAM’s Chief Executive Officer, Brian Shroder and its Chief Financial Officer, for all communications about various topics.
Binance stated that the regulator’s requests for communication are ‘overboard’ as well as ‘unduly burdensome’. Furthermore, the top exchange highlighted that it has provided the SEC with all necessary information to assure the commission of the safety of its customers’ assets. But the regulator seems hell-bent on conducting a “fishing expedition” on its operations and this has outraged Binance.
Unusual Judicial Oversight and Compromise
Stark believes that the entirety of the matter would be handled better with an unusual judicial oversight under an ‘onerous and exigently’ obtained Consent Order. He posited that a Temporary Restraining Order (TRO) Agreement which would be signed by D.C. District Court Judge Amy Berman Jackson who is currently presiding over the lawsuit.
This unique judiciary oversight technically come with expedited discovery, meaning that a summary judgment would be pronounced faster than expected. The ex-SEC official claimed that the current discovery dispute is not peculiar to the Binance/SEC case, adding that he experienced similar scenarios during his time as Chief.
In this case, Stark is confident that Judge Jackson will come to a compromise by taking either of two options. The judge may decide to oversee the discovery himself or end up appointing an experienced and trusted D.C. magistrate judge to supervise the process. To stay on course, Judge Jackson will likely set a couple of deadlines and hearing dates.
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