The world’s leading crypto exchange Binance is seeking court protection in the ongoing legal battle with the United States Securities and Exchange Commission (SEC). Last June, the regulator alleged that Binance.US operated in the country without adhering to securities laws.
Binance.US Allege SEC’s Highhandedness
Binance.US, the American arm of Binance, one of the world’s leading cryptocurrency exchanges, has reportedly submitted a formal request to limit the scope of the ongoing inquiries initiated by the SEC regarding the ongoing legal proceedings against the crypto trading platform.
The crypto platform wants to define the boundaries of regulatory scrutiny by obtaining a formal court request to limit the SEC’s scope of investigations into the company. According to the company, this approach emphasizes the exchange’s commitment to transparency and compliance while also attempting to address any concerns raised during the regulatory process.
In June, the SEC initiated a move to freeze Binance.US’s assets. The regulatory body expressed concerns about the security of the digital assets held by the company on behalf of its clients in the United States.
Binance’s US division, which goes by BAM Trading Services and BAM Management US Holdings, reportedly signed a deal with the regulator to drop all legal charges. The SEC and Binance.US later formed a unique partnership due to this agreement, which some analysts dub “burdensome.”
Within the context of the deal, Binance.US is expected to grant the regulator some leeway, allowing the regulatory body to conduct a focused and expedited investigation known as “limited expedited discovery.”
This investigation will enable SEC to delve into the intricate nature of custody and accessibility surrounding the client assets under Binance.US custody.
Why Did Binance.US Seek Court’s Intervention?
Meanwhile, Binance sought a court order to halt the SEC’s investigation claiming that the regulator had breached the terms of their agreement. Binance.US believes the SEC’s demands shouldn’t be related to the client’s assets under its custody.
The regulatory body had requested extensive communication records and depositions from the company’s top executives, which Binance.US sees as unnecessary. However, Binance.US claims these executives lack a thorough understanding of the underlying custody information.
According to the exchange’s court filing, the company genuinely complied with the SEC’s requests. They have provided several documents the regulator had asked for and scheduled depositions with asset security experts on their staff.
Binance had also taken proactive steps to ensure that assets remain in US custody in line with the nation’s securities laws. The cryptocurrency exchange noted in its legal defense that there is no indication of any misappropriation or mishandling of customer assets as alleged by the regulator.
It further noted that the crypto firm had provided the SEC with vast information, and the regulator conducted a lengthy investigation. However, the firm opposed the removal of high-ranking executives such as the CEO and CFO, as requested by the SEC, citing potential counterproductive effects, undue burden, and disruption to daily operations.
Binance.US suggests that the SEC focus its initial investigations on the employees in charge of asset custody. According to the firm, these individuals have a deeper understanding of the complexities of digital asset custody, making them more suitable to handle all queries from the regulator.