The protracted legal fight between renowned digital asset exchange Binance and the United States Securities and Exchange Commission (SEC) is intensifying. Recent Binance Lawsuit court documents, filed on January 25, expose heightened disputes surrounding evidence production and witness depositions.
The joint status report sheds light on the contentious nature of this regulatory case, with the SEC emphasizing outstanding aspects of discovery related to BAM Trading Services, the parent company of Binance.US.
Binance Lawsuit: Disputed Evidence Production
The regulatory body claims that crucial elements of discovery regarding BAM Trading Services remain unresolved, centered on extensive requests for evidence related to the custody and liquidity of assets held by Binance.US.
The SEC is particularly keen to unveil any potential backdoor access that Binance.US may have had to control customer assets, drawing parallels to the FTX collapse saga. In response, BAM Trading Services asserts that they have fully complied with the document production requirements outlined in the consent order and the expedited recovery request.
It contends that the SEC’s overall approach, encompassing the issuance of a Temporary Restraining Order (TRO) and the methods employed in expedited discovery, has imposed an undue burden on BAM.
The consent order, serving as the legal framework governing the SEC’s investigation, has become a focal point of contention. BAM argues that the regulator is exceeding the agreed-upon terms by broadening the scope of its inquiry.
They allege that the SEC’s investigation extends beyond ensuring the safety and proper accounting of customer assets to include a comprehensive examination of BAM’s custody policies and practices, both past and present.
Witness Depositions and Disagreements
A significant facet of the dispute revolves around the examination of key witnesses. The report indicates pending requests for depositions from BAM’s former CEO and CFO, likely referring to Brian Shroder and Jasmine Lee.
BAM argues against additional depositions of current or former BAM personnel, emphasizing that the SEC has already deposed numerous witnesses during the expedited discovery phase.
The potential examination of Binance co-founder Changpeng Zhao (CZ) adds another layer of complexity to the ongoing disagreements. Persistent disputes surround the specifics of Zhao’s deposition, including its scope, timing, and location.
Changpeng Zhao And Binance
In November 2023, CZ pleaded guilty to a violation of the Bank Secrecy Act and resigned as CEO of Binance as part of a $4.3 billion settlement with U.S. regulators. Currently free on a $175 million bond in the United States, Zhao faces a potential prison sentence of up to 18 months. Notably, his sentencing is scheduled for February 23, 2024, contributing further intricacies to the overall legal case.
Zhao has faced serious travel restrictions in this case. His legal team made a request in December 2023 for his visit to the UAE to be approved. In a filing on January 24, it was mentioned that the purpose of the trip was to assist an undisclosed individual who was hospitalized and undergoing surgery. Despite Zhao pledging $4.5 billion in Binance equity as security for his return, a federal judge surprisingly denied the application.
The outcome of this clash, with implications for Binance, BAM Trading Services, and the broader digital asset landscape, remains uncertain as the involved parties navigate the intricate legal landscape.
