Binance Fights Back Against the SEC and Files for a Protective Order

Binance recently filed for a protective order against the SEC as the agency gets a bit intrusive.

The United States Securities and Exchange Commission (SEC) has had its scope on major players in the cryptocurrency market following its loss in the Ripple lawsuit earlier this year. Binance, the leading cryptocurrency exchange in terms of daily trading volume, is the next key role player to be targeted by the regulatory agency.

Over the past few weeks, the SEC’s investigation into Binance’s reserves has intensified. Subsequently, Binance was left with no choice but to file for a protective order against the SEC over the past few days to protect itself from what it calls a “fishing expedition” by the agency.

To further mitigate their regulatory risk, Binance also announced the delisting of Polygon (MATIC) and Cardano (ADA) perpetual contracts. This development comes after the SEC labeled these cryptocurrencies, and several others, as securities.

Binance Seeks Protection From Sec’s Intrusive Investigation

The cryptocurrency industry has been a subject of intense scrutiny by regulatory bodies worldwide, and the ongoing battle between Binance and the SEC exemplifies this. In a recent development, Binance has sought a protective order against the SEC, alleging that the regulator's discovery requests have transformed into a "fishing expedition" that could infringe upon the company's privacy and business operations.

Yesterday, Binance filed a court document outlining its concerns regarding the discovery requests made by the SEC. While Binance claims to have acted in good faith by complying with a June court order, it argues that the SEC's subsequent requests have exceeded reasonable boundaries. The heart of the matter lies in the overly broad and all-encompassing nature of these requests, which reportedly seek "every single document in [Binance's] possession related to customer assets."

The tension between Binance and the SEC centers on the scope of the investigation and the permissible boundaries of regulatory oversight. Binance contends that the June court order granted permission for the SEC to discover information specifically related to Binance's custody, security, and availability of customer assets. However, the SEC's recent demands delve into areas that Binance deems unrelated to the core issues at hand, raising concerns about the potential intrusion into the company's internal communications and operations.

One crucial aspect of this dispute is the argument put forth by Binance that its asset custody practices are not under scrutiny in the SEC's lawsuit. Binance asserts that it has already cooperated by providing information about customer assets, and no evidence has been presented by the SEC to suggest that these assets have been misused. In light of this, Binance questions the necessity of complying with requests that reach beyond the purview of the initial court order.

A particularly contentious point is the SEC's demand for Binance to produce all communications dating back to November 2022, covering a wide range of topics. Binance claims that many of these topics have little or no relevance to customer assets or the core issues of the case. This request raises concerns about the privacy of the company's internal communications, as well as the potential disruption to its business operations.

The clash between Binance and the SEC highlights a broader conflict between regulatory oversight and the privacy rights of businesses. While regulators play a crucial role in ensuring compliance and protecting consumers, there is a delicate balance that must be struck between investigation and infringement. The notion of a "fishing expedition" points to the concern that regulatory bodies might use overly broad requests to access sensitive business information that extends beyond the immediate scope of the investigation.

The outcome of this legal tussle could have significant implications for both the cryptocurrency industry and the broader landscape of regulatory compliance. If Binance's concerns about privacy and the scope of discovery requests are validated, it could set a precedent for businesses to challenge regulatory overreach and protect their operational integrity. On the other hand, a ruling in favor of the SEC might reinforce the notion that regulators possess broad authority to request information in the interest of consumer protection.

In a rapidly evolving digital landscape, the clash between regulatory bodies and innovative businesses like Binance underscores the challenges of defining jurisdiction and ensuring a fair balance between compliance and privacy. As the case unfolds, it will undoubtedly shape the future contours of regulatory oversight within the cryptocurrency realm and beyond.

Binance to Delist ADA and MATIC Perpetual Contracts

In related news, Binance has announced the delisting of all ADA and MATIC perpetual contracts. The decision, set to take effect on August 17, is a direct response to the regulatory clampdown imposed by SEC.

Binance users who are active in trading futures will witness the removal of ADA and MATIC from the platform's catalog. The announcement from Binance comes in the wake of the SEC's categorization of these two altcoins, along with others, as securities.

The SEC's labeling of various cryptocurrency assets as securities has cast a shadow of uncertainty over the industry, affecting not only the specific projects but also platforms that host trading of these tokens. Binance's decision to delist ADA and MATIC perpetual contracts is indicative of the far-reaching implications that regulatory actions can have on the strategic choices of major cryptocurrency exchanges.

The list of crypto assets that the SEC has identified as securities includes well-known tokens like Binance Coin (BNB), Binance USD (BUSD), Solana (SOL), Filecoin (FIL), Cosmos (ATOM), Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and COTI (COTI). This expanded scope of regulatory oversight has compelled exchanges to reassess their offerings and operations to remain compliant and avoid potential legal entanglements.

Coinbase, another prominent cryptocurrency exchange based in the United States, found itself similarly embroiled in this regulatory scrutiny shortly after Binance's announcement. While both the Cardano and Polygon teams vehemently refuted the SEC's allegations, these rebuttals failed to sway the regulator's stance. The impact of the SEC's classification of these tokens is evident in Binance's strategic maneuvering, as reflected in the delisting decision.

The delisting process, set to occur on Thursday at 9:00 UTC, is accompanied by an automated settlement and changes to leverage and margin levels. Binance has advised its users to make necessary preparations in advance to smoothly navigate this transition.

With the impending delisting, users are left with a mere two-day window to establish new positions in ADABUSD and MATICBUSD perpetual contracts. This closing opportunity presents traders with the chance to capitalize on these contracts before they are removed from the platform.

BNB, MATIC and ADA Experience Slight Price Drops

Following the delisting announcement and the legal tussle with the SEC, ADA, BNB and MATIC all saw their prices slip slightly over the past 24 hours according to CoinMarketCap. At press time, the market tracking website indicated that BNB was changing hands at $238.75 after the altcoin’s price decreased 0.56%.

Similarly, the prices of ADA and MATIC stood at $0.2887 and $0.6734 after respective 24-hour losses of 0.30% and 0.87%. Furthermore, both cryptocurrencies' weekly performances were in the red zone as well. The Ethereum-killer, ADA, was down 1.56% for the week. Meanwhile, the negative daily performance for MATIC flipped the Layer-2 cryptocurrency’s weekly performance from positive to negative - bringing its weekly price movement down to -0.41%.