Court status report Binance, SEC accidentally confirms

Binance and the United States Securities and Exchange Commission continue to clash over production of evidence and witnesses in the regulator's lawsuit against the crypto exchange, court documents indicate.

According to a joint status report filed on Jan. 25, the SEC argued that “the benefits derived from BAM are striking.” BAM Trading Services is the parent company of Binance.US.

The SEC's request for evidence from Binance in the court case is extensive and has caused some controversy, especially regarding asset management and currency exchange. The regulator is looking for evidence that Binance.US had a backdoor to manage client assets similar to FTX.

BAM's lawyers stated that they have fully met the requirements for the production of documents as stipulated in the consent order and the expedited recovery request, urging the court to recognize that BAM has fulfilled all of its obligations.

“At that time, BAM believes that it will more than reasonably comply with its obligations under the Consent Order and requests for expedited discovery to be deemed complete by BAM, especially given how damaging and burdensome the SEC TRO has been and the expedited discovery process has resulted. BAM in the past seven months.

A consent order is a legal agreement that specifies what the SEC is authorized to investigate. BAM argued that the SEC's investigation should be limited to ensuring that client assets are safe and properly managed, and accused the regulator of going beyond that scope by conducting an extensive review of BAM's custodial policies, procedures and practices, current and historical records.

Another point of contention in the case is the examination of witnesses. Specifically, the document lists pending inquiries against “BAM's former CEO and CFO,” possibly Brian Schroder and Jasmine Lee.

“BAM does not believe the SEC is entitled to additional testimony from current or former BAM employees because, among other reasons, the SEC deposed a dozen witnesses during expedited discovery.”

Lawyers for BAM and the SEC are discussing current disputes with Binance co-founder Changpeng Zhao about the scope, time, place and amount of storage.

Zhao will step down as CEO of Binance in November 2023 as part of a $4.3-billion settlement with US regulators. His sentencing is scheduled for February 23, 2024, with the next status report in the case on February 15. Zhao is currently free in the United States on a $175-million bond and faces up to 18 months in prison.

Magazine: Diffie's Billion Dollar Secret: Insiders Responsible for Hacking