Magistrate Judge Zia Faruqui has denied the SEC’s request for immediate access to Binance.US’s software. 
Binance.US trading volume plunged to $5.09 million, down from $230 million in September 2022 due to regulatory troubles.

In an ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and cryptocurrency exchange Binance.US, a federal magistrate judge has denied the SEC’s request for immediate access to Binance.US’s software. The decision reached on Monday marks a temporary procedural setback for the SEC’s efforts to obtain crucial information from the exchange regarding alleged violations of American securities laws.

The SEC had sought permission from the federal magistrate judge to thoroughly inspect Binance.US’s technological infrastructure and compel the company to provide requested data. This move was part of the SEC’s strategy to investigate potential links between Binance.US and its global affiliate, Binance Holdings Ltd. However, during the hearing, Magistrate Judge Zia Faruqui expressed reluctance to grant immediate access. Instead, he advised the SEC to refine their requests and engage with additional witnesses.

SEC’s Concerns and Binance.US’s Response

The SEC has voiced concerns about the limited cooperation it has received from Binance.US. The exchange has handed over fewer than 250 documents and provided only three witnesses for deposition. In their filings, the SEC also referenced a “mass exodus” from Binance as part of their argument.

In response, Binance.US’s legal team has characterized the SEC’s quest for documents as a “fishing expedition” and criticized it as excessively broad. They have also pushed back against making top executives available for deposition. Asserting that these executives lack firsthand information concerning customer asset security and custody.

The legal dispute began in June when the SEC accused Binance.US of violating U.S. securities laws. As a result, the SEC sought to investigate potential connections between Binance.US and the global exchange. Although an agreement between the two parties prevented a complete freeze of Binance.US’s assets, the exchange is restricted to utilizing its funds solely for essential business operations.

The SEC’s concerns about not receiving essential documents and facing obstacles in deposing key witnesses persist. Magistrate Judge Faruqui acknowledged the need to advance the case despite the procedural challenges faced by the SEC.

Binance.US Trading Activity Declines

According to data from Amberdata, trading volume on Binance.US experienced a substantial drop, dwindling to $5.09 million over the past weekend. To put this into perspective, just a few days earlier, on September 17, 2022, the exchange boasted a trading volume of approximately $230 million.

This sharp decline in trading activity has been most pronounced since March, coinciding with regulatory allegations made by the U.S. Commodity Futures Trading Commission against Binance CEO Changpeng Zhao. In June, the SEC launched legal proceedings against Binance.US, Changpeng Zhao, and the parent company, Binance.  Citing a range of infractions, including allegations of misrepresenting trading controls and oversight on the Binance.US platform.

Binance.US, headquartered in Miami, is now embroiled in a legal battle. In a recent filing, the SEC claimed that the exchange has struggled to maintain a consistent narrative. In the aftermath of the lawsuit, Binance.US halted trading for more than 100 token pairs, resulting in a significant downturn in exchange activity and investor confidence.

Furthermore, the company faced internal turmoil, including the resignation of its CEO, Brian Shorder, along with other key executives, such as Head of Legal Krishna Juvvadi and Chief Risk Officer Sidney Majalya. These departures occurred in the weeks following Shorder’s resignation.

 

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Filed under: Bitcoin - @ September 19, 2023 10:21 am