The ongoing legal skirmish between Binance.US and the United States Securities and Exchange Commission (SEC) has taken a new turn as Binance.US, the American arm of the global cryptocurrency exchange Binance, has responded vehemently to the SEC's demands, characterizing many of them as "unreasonable" and "unduly burdensome." This development comes after the SEC had sought additional details from Binance.US in a motion to compel. Attorneys representing BAM Trading Services, the entity that operates Binance.US, filed sealed documents on earlier today, outlining their objections to the SEC's extensive requests.
Binance.US Expresses Its Opinion Towards Latest SEC Filing
At the core of BAM's argument is the assertion that the SEC's demands for production of documents and interrogatories are "overly broad" and reach "beyond the scope of the consent order" that had previously been agreed upon. BAM's legal team argued that the SEC's pursuit of absolute certainty and its insistence on conducting depositions of BAM CEO Brian Shroder and Chief Financial Officer Jasmine Lee were both "unreasonable" in nature.
In their response, they emphasized that the SEC had thus far failed to produce any tangible evidence suggesting that Shroder and Lee were directly involved in the daily management of customer asset custody and transfer operations at Binance.US. The attorneys stated, "BAM’s CEO and CFO have no unique knowledge regarding facts relevant to the limited topics identified in the consent order’s expedited discovery provision."
They went on to assert that BAM had put forth alternative witnesses who possessed more in-depth insights into the inner workings of the exchange, including BAM's Chief Information Security Officer, Erik Kellogg. Furthermore, the legal team argued that the potential disruption and burden imposed by the depositions far exceeded any possible benefits and that the discovery sought by the SEC was disproportionate to the requirements stipulated in the consent order.
In addition to challenging the SEC's demands, BAM's legal team vehemently disputed the SEC's allegations, asserting that the regulatory body still had not presented any concrete evidence to substantiate its claims of customer asset diversion. They characterized the SEC's allegations as "misleading and mistaken," signaling their determination to contest the SEC's case on multiple fronts.
One notable point raised by the attorneys was the "complete disconnect" between the SEC's current "overbroad and abusive approach" and the limited expedited discovery parameters that both parties had initially agreed upon in the consent order. This disconnect, as noted by the legal team, has added a layer of complexity to an already contentious legal battle.
BAM's response to the SEC's motion occurred shortly after an agreement between both parties to file confidential information under seal. Yesterday, the SEC and Binance.US jointly submitted a protective motion, pledging that confidential and non-public information would remain restricted to specific parties, such as the judge, attorneys, plaintiffs, and defendants.
As this legal tussle continues to unfold, the cryptocurrency community and market observers eagerly await further developments, as the outcome of this case could carry significant ramifications for the regulation of cryptocurrency exchanges operating within the United States. The clash between Binance.US and the SEC serves as a pivotal moment in the evolving landscape of digital asset regulation in the country, with implications reaching far beyond the immediate parties involved.
Binance Executive Responds to Claims That It Is Similar to FTX
In related news, Richard Teng, the head of regional markets at Binance, has categorically refuted any operational similarity between the world's largest cryptocurrency exchange and the now-collapsed FTX. In an exclusive interview with Andrew Fenton ahead of the 2023 Token2049 conference in Singapore, Teng addressed various issues affecting Binance, including regulatory concerns, user engagement, and the potential succession of Binance CEO Changpeng Zhao (CZ).
Teng firmly rejected comparisons with FTX, asserting that both exchanges were structured differently, particularly in terms of asset management and customer relations. This statement comes amid rumors and speculations that attempted to associate Binance with the troubles faced by FTX, which went under earlier this year.
Teng emphasized Binance's commitment to transparency, stating that Binance's assets were backed on a 1:1 basis, meaning the exchange holds sufficient reserves to cover user assets should the need arise. This assurance was reaffirmed in Binance's most recent proof of reserves report, which indicated that assets, including Bitcoin (BTC) and Ethereum (ETH), were over-collateralized at more than 5%, while Binance Coin (BNB), Tether (USDT), and Binance USD (BUSD) were over-collateralized at 114%, 118%, and 107%, respectively.
Regarding regulatory challenges, Teng acknowledged that Binance faced hurdles in different jurisdictions due to varying rules and regulations. He praised the Markets in Crypto Assets (MiCA) regulation as a significant step towards creating industry standards to guide all stakeholders, emphasizing the need for harmonized standards in the cryptocurrency space.
Teng also expressed the exchange's commitment to complying with regulations despite the complexities involved. He touched upon the recent concerns raised by Russian regulators and confirmed that Binance had not yet made a final decision regarding the Russian market. However, he reiterated Binance's unwavering commitment to adhering to global standards when dealing with sanctioned firms.
"On our plans for Russia, we have stated very clearly in the last couple of weeks that all options are on the table. We continue to explore what we need to do for that particular franchise going forward," Teng stated.
It is worth noting that Binance recently faced criticism for continuing to list two sanctioned Russian banks in its peer-to-peer services. The exchange eventually withdrew the listings for both banks, following similar actions taken by competitors Bybit and OKX.
In the wake of regulatory challenges and the recent Russian controversies, several Binance executives have departed from the company. While CZ has downplayed the significance of these departures, some industry observers have raised concerns about the implications for the exchange's leadership and its ability to navigate the evolving regulatory landscape.
As Binance continues to grapple with regulatory complexities and strives to maintain its position as a global cryptocurrency exchange giant, the industry will be closely monitoring how it addresses these challenges and adapts to an ever-changing regulatory environment.
Meanwhile, the cryptocurrency price tracking website CoinStats indicated that Binance’s native token, Binance Coin (BNB), was changing hands at $209.80 at press time. This was after the altcoin was able to achieve a 0.28% gain over the past 24 hours. Despite the positive daily performance, BNB’s price remained 2.33% down for the week.
Price chart for BNB (Source: CoinStats)
BNB was able to reach a 24-hour high of $210.48, while its daily low sat at $204.50. Furthermore, the cryptocurrency was able to gain on the market leader Bitcoin (BTC) throughout the past day of trading. At press time, CoinStats indicated that BNB was up 0.03% against BNB. Subsequently, 1 BNB token was estimated to be worth 0.0081313 BTC.