Binance, the world-renowned cryptocurrency exchange, remains locked in a legal tug-of-war with the U.S. Securities and Exchange Commission (SEC) as laid bare in court filings. At the heart of the dispute lies disagreements over the compilation of evidence and the structuring of witness testimonies in the running case the SEC has against Binance.
A joint status report, submitted on January 25th, reveals the SEC’s perspective that there are outstanding elements of discovery from BAM Trading Services, the organization at the helm of Binance.US. The SEC has carried out an extensive and far-reaching investigation for evidence in the case which has created friction, mainly on issues revolving around asset custody and liquidity. Specifically, the SEC seeks to validate if Binance.US may have had covert control over customer assets, similar to the situation with FTX.
BAM attorneys counter this by maintaining they have stayed within the provisions of the consent order and expedited recovery request regarding document productions. They call on the courts to declare that BAM has met all its responsibilities. BAM is of the opinion that the SEC’s investigative scope should be narrowed down to certifying the safety and accounting accuracy of customer assets. They accuse the SEC of going beyond the stipulated boundaries by probing extensively into BAM’s historical and present custody policies and practices.
The examination of key witnesses has also raised concerns. The main focus of these worries lies with requests for testimonies from “Binance’s former CEO and CFO,” which could refer to Brian Shroder and Jasmine Lee. The lawyers of BAM do not believe additional depositions from past or current BAM staff are necessary because the regulator has already deposed many witnesses.
A possibility of scrutinizing Binance’s former co-founder, Changpeng Zhao, is another matter of contention between BAM and the SEC’s lawyers. Zhao, who stepped down as CEO in the wake of a $4.3 billion settlement, is set for sentencing on Feb. 23, 2024. Following his resignation, Zhao is currently out of police custody, courtesy of a $175 million bail in the U.S, and he potentially faces 18 months behind bars.