The ongoing legal battle between Binance and the United States Securities and Exchange Commission (SEC) continues to escalate as court documents reveal disputes over evidence production and witness depositions.
The latest joint status report filed on January 25 sheds light on the contentious nature of this regulatory case.
The SEC asserts that there are crucial aspects of discovery related to BAM Trading Services, the parent company of Binance.US, that are still outstanding.
This dispute has arisen due to the SEC’s extensive requests for evidence, particularly concerning the custody and liquidity of assets held by Binance.US.
The regulator is keen to uncover any potential backdoor access that Binance.US might have had to control customer assets, akin to FTX.
In response, BAM Trading Services contends that they have fully adhered to the document production requirements set forth in the consent order and expedited recovery request.
They urge the court to acknowledge their compliance and to consider expedited discovery as complete for BAM.
They express the belief that the SEC’s Temporary Restraining Order (TRO) and its approach to expedited discovery have caused undue harm and burden over the past seven months.
The consent order, which outlines the scope of the SEC’s investigation, is another bone of contention. BAM argues that the SEC’s inquiry should be limited to confirming the safety and proper accounting of customer assets.
They accuse the SEC of overstepping by broadly investigating BAM’s custody policies, procedures, and practices, both past and present.
Furthermore, the document highlights ongoing disagreements about witness examinations. Specific requests for depositions of “BAM’s former CEO and CFO,” presumably Brian Shroder and Jasmine Lee, are mentioned.
BAM argues against additional depositions of current or former BAM personnel, citing the numerous depositions that have already taken place during expedited discovery.
Additionally, discussions regarding the examination of Binance co-founder Changpeng Zhao are underway. However, disputes persist regarding the scope, timing, location, and number of depositions related to Zhao.
Zhao’s resignation as CEO of Binance in November 2023 as part of a $4.3-billion settlement with U.S. regulators adds complexity to the case.
His sentencing is scheduled for February 23, 2024, while the next status report on the case is due by February 15.
Currently, Zhao is free on a $175-million bond in the United States and faces a potential prison sentence of up to 18 months.
The legal clash between Binance and the SEC appears far from reaching a resolution.