SEC is conducting a ‘fishing expedition’ instead of seeking discovery, Binance.US claims

Binance.US operators claims the SEC is being “unreasonable” with its requests

August 15, 2023 11:04 am

Scott Maxwell LuMaxArt/Shutterstock modified by Blockworks

The operators of Binance.US are seeking to limit the US Security and Exchange Commission to four depositions of BAM employees. They are also pursuing limitations on the scope of questioning during these deposition sessions.

BAM Trading, BAM Management filed a motion for a protective order in the SEC’s case against the exchange.

The motion aims to prevent the SEC from accessing “all communications” from BAM. The defendants argue that many of the topics the SEC is pushing for have nothing to do with customer assets.

The SEC is also requesting the CEO, chief financial officer and “at least six employees and officers” to be made available for depositions, which is more than the four witnesses that BAM offered previously.

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It’s unclear who BAM offered, as the filing just says that the witnesses include the “two best positioned to address questions about the custody and security of customer assets.”

Binance.US operators further claim that the SEC’s “position is unreasonable” and that the regulatory agency is “abusing” the limited expedited discovery that the Court ordered earlier this summer.

Both BAMs claim that the SEC’s requests go deeper than just ensuring that customer assets are safe; they believe that the requests are part of the SEC’s “inappropriate fishing expedition” to uncover any evidence that customer assets are at risk.

However, Binance.US says that the demands are being made without a “justifiable basis.” The discovery being sought is outside of the merits of the ongoing case.

“In sum, BAM’s CEO and CFO need not be deposed on the limited topics authorized in the Consent Order, and courts regularly preclude such depositions in the circumstances presented here,” the filing said.

The SEC sought — and was later denied — a temporary restraining order against Binance.US earlier this summer. However, the judge overseeing the case urged both the SEC and Binance to find a compromise to avoid a full asset freeze.

Binance, CEO Changpeng Zhao, and the entities behind Binance.US were all named in the SEC’s lawsuit filed in June.

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