Binance Seeks Protection Over SEC’s Extensive Discovery Requests

In a significant move, Binance has sought legal protection against the extensive demands of the U.S. Securities and Exchange Commission (SEC). The core of the dispute revolves around what Binance perceives as an unduly broad exploration by the SEC.

The SEC’s “Fishing Expedition” 

Binance’s recent court document dated Aug. 14th highlights its concerns. The leading cryptocurrency exchange accuses the SEC of embarking on a so-called “fishing expedition.” The SEC’s discovery requests, according to Binance, have become overly broad, seeking comprehensive documentation regarding customer assets.

Despite the rigorous demands, Binance emphasizes its commitment to the June court order. They believe they have complied in good faith. However, they argue that the SEC interprets this order as a blank check, permitting a limitless probe into Binance’s asset custody practices.

The core of the issue lies in the relevance of these demands. While the June order focused on discovering Binance’s custody and security of customer assets, Binance contends many of these requests don’t pertain to the primary concern. They’ve cooperated by providing data on customer assets. Yet, the SEC has failed to indicate any misuse of these assets.

Extensive Communication Requests 

Furthermore, Binance is critical of the SEC’s desire to access communications stretching back to November 2022. They argue these requests encompass “dozens of topics”, most unrelated to customer assets.

Binance also expresses concerns regarding the SEC’s demands to depose six of its key figures, notably including its CEO, Changpeng “CZ” Zhao. The exchange argues that these senior members lack firsthand knowledge of issues related to the security and transfer of customer assets. Binance has, however, offered depositions from personnel directly overseeing customer funds— an offer that seems to have been overlooked by the SEC.

What Binance Proposes 

In seeking the protective order, Binance wishes to restrict the SEC. They propose limiting depositions to four employees, excluding Zhao and the CFO. Additionally, they want to prevent the SEC from questioning these individuals on topics not covered by the initial order, thereby focusing the discussions strictly on customer assets.

It’s vital to note the broader context. The SEC initiated a lawsuit against Binance and Binance.US in June, alleging they facilitated an unlicensed securities exchange and dealt in unregistered securities. Furthermore, Zhao has been pinpointed as a significant figure in the lawsuit. Simultaneously, Binance is contending with a suit from the Commodity Futures Trading Commission, which the exchange diligently attempts to dismiss.

The stakes remain high as Binance and the SEC continue their legal dance. The protection Binance seeks is not merely about shielding its operations but ensuring a fair and relevant examination of its practices. The outcome will undoubtedly shape the cryptocurrency landscape and regulatory practices for years.

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