In a pivotal courtroom showdown on September 18, the United States Securities and Exchange Commission (SEC) faced a temporary setback in its ongoing legal battle with Binance.US. The regulator’s request for immediate access to Binance.US’s software and a deeper probe into the company’s operations was met with skepticism by Judge Faruqui, who stated he wasn’t “inclined to allow the inspection at this time.” This latest development adds another layer of complexity to the already contentious relationship between the SEC and the cryptocurrency exchange.
The hearing was convened to address the SEC’s motion to compel Binance.US to provide comprehensive information and make its executives more accessible for depositions. These demands have been at the heart of the dispute between the two entities for the past week.
Judge Faruqui’s decision, as reported by Bloomberg on September 18, proposed an alternative approach. Instead of granting immediate access, he recommended that the SEC formulate more specific requests for discovery and broaden its scope by speaking with a wider array of witnesses. This turn of events marks a pause in the SEC’s efforts to gain quick access to Binance.US’s software and related documentation.
The SEC’s grievances against Binance.US have been mounting since it filed a lawsuit on June 5 against the American arm of the cryptocurrency exchange, as well as its international affiliate, Binance Holdings Ltd, and CEO Changpeng “CZ” Zhao. The suit alleges their involvement in the sale of unregistered securities.
In a further escalation of tensions, on September 15, the SEC publicly accused Binance.US of noncooperation during the investigation. The regulator emphasized that Binance.US’s parent company, BAM Trading, had produced only 220 documents during the discovery process. Judge Faruqui’s decision to withhold immediate access to Binance.US’s software and other critical documentation represents a partial setback for the SEC in its ongoing legal crusade against the cryptocurrency exchange.
Central to the SEC’s concerns is the custody of customer assets held by Binance.US. The regulator contends that a more comprehensive investigation of Binance.US is necessary to uncover potential links to its global counterpart.
While Judge Faruqui’s recent ruling may appear to slow the SEC’s progress, it does not signal the end of this legal battle. Instead, it underscores the complexity of regulating the fast-evolving cryptocurrency industry and the challenges faced by authorities in obtaining access to critical information from digital asset platforms.
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