US SEC Fails In Securing the Inspection of Binance US Software
On Monday, September 18, the US Securities and Exchange Commission (SEC) failed to convince a magistrate judge to allow its officials to delve into Binance.US’s software.
The SEC has encountered difficulties in obtaining information from Binance.US following its lawsuit against the American exchange, its global affiliate Binance Holdings Ltd. On Monday, the regulator requested permission from a federal magistrate judge to conduct a technological infrastructure inspection of Binance.US and compel the company to provide other requested data.
However, during a Monday hearing, federal Magistrate Judge Zia Faruqui expressed reluctance to permit the inspection at this stage. Instead, he advised the SEC to formulate more specific requests and engage with additional witnesses.
The magistrate’s decision to deny SEC immediate access is a temporary procedural loss. In its Monday filing, the US SEC said that Binance.US has handed over fewer than 250 documents while offering just three witnesses to probe. Interestingly, in Monday’s filings, the US SEC also cited the “mass exodus” in binance in order to prove its point.
In its lawsuit filed in June, the SEC accused Binance.US of breaking the American securities laws. The securities regulator has been pushing for inspecting Binance.US’s possible links with the global exchange.
Binance.US Snubs the US SEC
Binance.US’s legal team has called the SEC’s quest for documents a “fishing expedition” and excessively broad. The company has also pushed back against making its top executives available for deposition, asserting that they lack firsthand information regarding customer asset security and custody.
Matthew Martens, an attorney from WilmerHale representing Binance.US, stated during the hearing that the company has cooperated with every specific request made by the SEC. He emphasized that they would not respond to what he deemed as unreasonable document requests from the government.
Following the SEC’s lawsuit against Binance.US, the two parties entered into an agreement that prevented a complete freeze of the company’s assets. However, under this arrangement, Binance.US is only allowed to utilize its funds for essential business operations. Subsequently, the SEC has raised concerns about not receiving crucial documents and facing obstacles in deposing key witnesses.
“At some point we are going to have to bite the bullet and move on with the case,” Faruqui, the magistrate judge, said.
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