In a recent court filing, BAM Trading, the operating company of Binance U.S., and BAM Management expressed their concerns over the U.S. Securities and Exchange Commission’s (SEC) “troubling and inappropriate” abuse of information requests. The SEC is demanding the production of “all communications” from at least six employees and executives of BAM, dating back to November 2022. According to BAM, these requests cover numerous topics that have no relation to customer assets. Furthermore, the financial regulator wants to depose several employees and officers, including the CEO and CFO of BAM. The company described the SEC’s actions as a “fishing expedition” and highlighted its attempts to comply with some of the demands in good faith. However, it contends that the requests are excessive and unreasonable, emphasizing that courts do not tolerate such discovery abuse.
BAM Trading argues that the SEC’s approach has failed to provide any evidence that the company misused or mishandled its customers’ assets. It asserts that the regulator’s case is unrelated to its asset custody practices. Despite their efforts to persuade the SEC to limit its discovery demands, BAM states that the regulator remains steadfast in its belief that the Consent Order grants it unlimited investigative powers. As a result, the crypto firm is seeking a protective order to restrain the SEC’s actions. Their request includes constraints on information requests related to the ongoing case and limiting the number of depositions involving BAM staff. Notably, the company proposes excluding its CEO and CFO from the deposition process.
The court filing reveals that the SEC’s lawyers have opposed BAM Trading and BAM Management’s motion for a protective order. This opposition adds to the escalating legal tussle between the regulatory body and Binance US, which began with the SEC filing a lawsuit against both companies in June. The lawsuit accused them of violating federal securities law. Since then, the ongoing legal dispute has significantly impacted the operations of Binance US.
The SEC’s aggressive approach in its investigation has drawn criticism from BAM Trading and BAM Management, who perceive the regulator’s actions as overreaching and disproportionate. The companies argue that the SEC has failed to demonstrate any wrongdoing in their custody practices and that the wide-ranging requests are unreasonable. As the legal battle continues to unfold, Binance US and BAM Trading face the challenge of defending their reputation against the SEC’s claims. The outcome of this case will undoubtedly have profound implications for the regulation of the cryptocurrency industry in the United States.
Leave a Reply