- Ongoing legal battle between Binance and the SEC intensifies with disputes over evidence production and witness depositions.
- SEC raises concerns about outstanding aspects of discovery related to BAM Trading Services, the parent company of Binance.US.
- BAM Trading Services argues compliance with document production requirements but criticizes SEC’s approach to expedited discovery.
- Disagreements persist over the scope and timing of witness examinations, including former BAM executives and Binance co-founder Changpeng Zhao.
- Zhao’s resignation and impending sentencing add complexity to the case, with the next status report due on February 15.
The legal battle between Binance and the SEC enters a new phase as disputes over evidence production and witness depositions come to light. The SEC has raised concerns regarding crucial aspects of discovery related to BAM Trading Services, the parent company of Binance.US. Specifically, the regulator seeks clarification on custody and liquidity matters concerning assets held by Binance.US, akin to FTX.
BAM Trading Services, however, asserts full compliance with document production requirements outlined in the consent order and expedited recovery request. They argue that the SEC’s Temporary Restraining Order (TRO) and approach to expedited discovery have inflicted undue harm over the past seven months. BAM urges the court to recognize their compliance and considers expedited discovery complete for BAM.
The scope of the SEC’s investigation, as outlined in the consent order, remains a point of contention. BAM insists that the inquiry should focus solely on confirming the safety and proper accounting of customer assets. They accuse the SEC of overreach by broadly investigating BAM’s custody policies, procedures, and practices, past and present.
Witness Examinations and Changpeng Zhao’s Involvement
Further disagreements revolve around witness examinations, including depositions of former BAM executives and Binance co-founder Changpeng Zhao. Despite numerous depositions during expedited discovery, BAM argues against additional depositions of current or former personnel. Discussions concerning the examination of Changpeng Zhao are ongoing, with disputes over scope, timing, location, and number of depositions.
Changpeng Zhao’s resignation as CEO of Binance in November 2023 as part of a $4.3-billion settlement with U.S. regulators adds complexity to the case. His impending sentencing on February 23, 2024, and current bond status of $175 million in the United States further complicate the legal landscape.