The U.S. Securities and Exchange Commission (SEC) filed a reply to support its motion to compel Binance Holdings Limited to comply with expedited discovery related to customer assets. The reply comes after months of alleged delays and incomplete responses from Binance as it fights a lawsuit alleging it violated federal securities laws.
SEC Seeks Court-Ordered Probe of Binance US in Ongoing Crypto Custody Clash
In the 12-page document, the SEC argues Binance has failed to fully comply with a consent order requiring it to hand over documents and other information about the custody and control of customer crypto assets. The agency says recent depositions have revealed Binance likely withheld responsive documents and information without proper justification. The SEC’s court filing states:
[Binance] has provided inconsistent representations about key facts, slow-rolled small productions of documents and information, and stonewalled on entire categories of information that would likely shed light on its shaky assertions concerning the custody of customer assets.
The SEC points out reported conflicting statements from Binance about which entity or entities have custody of customer assets. It also notes the company was initially confused about the role of a Binance-related firm called “Ceffu” in controlling assets. The SEC says this underscores the need for complete discovery to ensure assets are safe during litigation.
“This court should reject [Binance’s] half-hearted claims of irrelevance, prejudice, and burden, and instead grant the Motion to Compel in its entirety,” the SEC’s legal team wrote.
Binance claims it has fulfilled discovery obligations and that further requests are unduly burdensome. But the SEC counters this argument lacks specificity and evidence to back it up. The regulator says the limited discovery so far reveals crucial communications and other materials exist that Binance failed to produce.
The SEC motion seeks to compel Binance to hand over documents on wallet custody practices, communications on controlling assets, materials from departed employees and other information. The U.S. agency says this will shed light on who controls customer assets and ensure compliance with the consent order.
What do you think about the SEC’s latest court filing looking for the court’s permission to investigate Binance US? Share your thoughts and opinions about this subject in the comments section below.