With the latest tug of war between the Securities and Exchange Commission (SEC) and Binance.US (BAM), the latter has claimed the SEC’s call for executive depositions and additional discovery to be overly burdensome and indiscriminate. More so, it expressed that until now, no concrete proof of misused customer funds was presented. Despite substantial discovery produced during the expedited discovery period, the SEC appears to lack evidence to back its allegations, suggesting misdirection of investor assets, according to the statement from the exchange.
In June, the SEC put forward accusations alleging that the CEO of Binance, Changpeng ‘CZ’ Zhao, and Guangying ‘Helina’ Chen were channeling billions of customer funds through third-party companies. The evidence was reportedly based on testimony from an SEC accountant. Binance along with its CEO openly refuted all these claims. They confirmed that they were not holding custody or control over the private keys for customer assets on their exchange.
The SEC then attempted to freeze the assets of Binance.US. However, a U.S. judge refused the request, and instead instructed both parties to commence discussions on ongoing operations. Still, the SEC’s extensive demands, including documents related to the exchange’s custody software and wallet solutions, were questioned by BAM in the filing. The exchange added that the SEC has not provided a sound explanation of why depositions of its CEO and CFO would fall within the boundary of the Consent Order.
BAM argues that the burden set out by these depositions far exceeds their potential benefits. Additionally, they claim that the discovery sought is out of proportion to the needs anticipated by the Consent Order. This ongoing disagreement brings attention once again to the delicate line rolled out by the SEC in its regulation of the crypto industry. Promoting transparency and protecting the investor is juxtaposed against the necessity of not stifling innovation or overstepping the regulatory parameters.
Understandably there is a need to guard the consumer, but without substantial evidence and justifiable reasoning, the extensive scrutiny might seem unjust. This case certainly stands as a crucial example, shedding light on the balance that needs to be struck in this new age of financial technology. The story took a slight shroud as BAM lodged eight exhibits under seal, and certain sections of the filing were expunged from public record. Only time will reveal the final unfolding of this standoff.
Source: Coindesk
