Binance says SEC has no evidence on misuse of customer assets

abdelaziz Fathi

Binance.US (BAM) has responded to the Securities and Exchange Commission’s motion for depositions of the exchange’s executives and further discovery.


In its response, Binance.US characterizes the SEC’s motion as “unduly burdensome” and “freewheeling.” The exchange argues that it has not been presented with evidence that customer funds were wrongfully diverted, and therefore, the requested depositions and discovery are excessive.

The US affiliate of crypto exchange giant Binance filed a motion for a court order to protect itself against an inappropriate “fishing expedition” by the U.S. Securities and Exchange Commission (SEC).

“Even after all of the discovery already produced by BAM during the expedited discovery period, the SEC still has no evidence to support its unsubstantiated allegations that imply investor assets have been somehow diverted,” the filing reads.

Binance’s protective order would set limits on the number of employees the SEC can question, excluding key figures like CEO Changpeng “CZ” Zhao, claiming that its senior executives “do not have unique firsthand knowledge about the facts surrounding the security, custody, and transfer of customer assets.”

The order would also restrict the scope of questioning to matters directly related to the consent order and prevent requests for communications about topics other than customer assets.

“BAM has worked in good faith, but the SEC has been steadfast in its belief that the Consent Order gives it carte blanche to investigate every aspect of BAM’s asset custody practices without any discernible limitation whatsoever,” it stated.

Binance US claims that the SEC’s information requests are just too much to handle and are creating unnecessary burdens. The filing also aims to limit the scope of the information that the SEC is asking for as part of their case against the cryptocurrency exchange.

Back in June, the U.S. arm of Binance, which operates under BAM Trading Services and BAM Management US Holdings, agreed to a consent order with the SEC after the agency sought to freeze all of its assets. However, according to the recent filing, Binance alleges that the SEC’s discovery requests go way beyond what was agreed upon and argues that its demands are essentially a “fishing expedition” and not relevant to the probe.

In its court filing, Binance.US noted that they’ve already provided adequate information to the regulator. As such, the protective order they’re seeking would restrict the SEC to a limited number of depositions from BAM employees and would exclude communications and testimony of the CEO and CFO, without specifying any names.

Binance’s beef with the SEC centers around the fact that the SEC’s discovery requests are way too broad and unreasonable, demanding “every single document in [Binance’s] possession related to customer assets.” The exchange argues that these requests are inappropriate because the custody practices of customer assets weren’t the focal point of the SEC’s lawsuit. Binance has previously handed over information about customer assets and contends that the SEC hasn’t shown any evidence of misused customer assets.

“All the evidence in this matter—including documents, declarations, and sworn deposition testimony—supports BAM’s position that it has custody and control of its digital assets,” the exchange wrote.

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