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In a significant update on the legal battle between the US Securities and Exchange Commission (SEC) and Binance, the SEC has revealed plans to virtually inspect Binance.US’s technical infrastructure, systems, and software. This move comes as part of the ongoing investigation into alleged securities law violations involving the crypto exchange.
The latest joint status report, a crucial document submitted to the court, highlights the continued cooperation of defendants Binance, Binance.US, and co-founder Changpeng Zhao in accordance with the June consent order. It discloses that Binance.US has been diligently complying with document production and deposition requests by the SEC.
The report also outlines a proposed inspection of Binance.US’ technology infrastructure by the SEC, scheduled to take place virtually. Despite previous denials by the court for an immediate inspection, the SEC is now considering this scrutiny, aiming to delve deeper into the exchange’s systems and software. The proposed inspection is tentatively set for 7 pm ET on December 21.
Earlier court proceedings saw Magistrate Judge Faruqui denying an immediate inspection of Binance.US systems and software, citing the need for more specific requests from the SEC and the involvement of additional witnesses. Binance.US, in turn, opposed the escalating requests for document discovery and depositions by the regulatory body.
Furthermore, recent developments have seen Binance.US hiring five specialized attorneys to represent BAM Management US Holdings and BAM Trading Services in the ongoing legal battle. These legal experts, including Sheehan H. Band, Levi Giovanetto, Daniel J. Davis, Christian Kemnitz, and David Luger, filed separate notices of appearance, indicating a fortified legal defense for Binance.US.
Just last week, defendants Binance Holdings, Binance.US, and co-founder Changpeng “CZ” Zhao filed a request with Judge Amy Berman Jackson to dismiss the lawsuit with prejudice. They argue that the SEC’s claims regarding securities law violations concerning listed crypto and related products lack merit and coherence.
The latest joint status report, submitted by the plaintiff SEC and defendants—Binance, Binance.US, and CZ Zhao—to the court, elucidates a cooperative stance by the defendants in line with the June consent order. Notably, the defendants have been actively complying with document production and depositions, further solidifying their commitment to legal proceedings.
Binance.US has explicitly informed the court about its ongoing cooperation by fulfilling the SEC’s requests for documents and depositions. Both parties have mutually agreed to engage in discussions to resolve any potential disagreements regarding document discovery and deposition proceedings before the next status report, scheduled for January 25, 2024.
The SEC’s latest move involves considering a virtual inspection of Binance.US’s technological framework, aiming to scrutinize its infrastructure, systems, and software. A proposed inspection, set to occur at 7 pm ET on December 21, has been put forward by Binance.US, seeking to facilitate the review process.
However, it’s important to note that a previous attempt by the SEC for an immediate inspection faced rejection by Magistrate Judge Faruqui. The judge emphasized the necessity for more tailored requests from the SEC and urged enhanced communication with additional witnesses before granting such inspections. Binance.US had also opposed escalating document discovery and deposition requests initiated by the SEC.
As this legal saga continues to unfold, it raises pertinent questions about the regulatory oversight of the burgeoning cryptocurrency market. The implications of this inspection and the court’s subsequent decisions hold significant weight for both Binance and the broader crypto industry.
While the SEC aims to ensure compliance with securities laws, Binance and its entities are vehemently contesting the allegations, defending their position in the crypto landscape. The outcome of this legal confrontation could potentially shape the regulatory landscape for digital assets within the United States.
