Binance doesn’t give up on the SEC in new filings

Binance doesn’t give up on the SEC in new filings

The American Securities and Exchange Commission (SEC) has accelerated its lawsuit against BAM Trading Services, which offers its services in the United States under the well-known name Binance. Indeed, the supervisory body filed a request with the court to obtain the publication of documents that the stock exchange tried to hide from it.

Update 19-09-2023 03:20 CET: Since this article was written, the SEC Inspection Request would have been refused.

American regulators therefore regard the publication of the documents as a necessary and appropriate step in good faith by BAM, alias Binance. However, the crypto exchange’s lawyers categorically deny the relevance and fairness of the SEC’s requests.

The SEC is tightening the screw

The regulator wants to know more about the service providers that Binance may have turned to for portfolio management software, among other things.

According to the SEC, BAM has not responded to its requests for information. For its part, Binance believes it is protecting its customers’ interests and its own by refusing to comply with the request.

Much to the SEC’s frustration, crucial documents that could have shed light on this reluctance on the exchange’s part were sealed, making it extremely difficult to prove that Binance refused to cooperate.

Late last week, however, the SEC finally got a federal judge to rule in its favor. For example, Judge Zia M. Faruqui’s September 15 order required the unsealing of sixteen documents and the partial unsealing of nine other documents.

The newly released documents reveal the legal maneuvers BAM has used to maintain secrecy over its internal affairs. And to also keep them out of reach of the media, the public and especially the regulators who want to shut down Binance once and for all.

Binance’s market share has plummeted since the problems with the SEC. Source: Kaiko

BAM rejects ‘oppressive’ SEC demands

One of the most telling elements of Judge Faruqui’s decision is “Appendix 4.” Indeed, it concerns a document filed on July 5 in a federal court in Washington DC, by BAM’s lawyers from the law firms Wilmer Cutler and Milbank.

In this 31-page document, attorneys for the exchange service reject the SEC’s requests.

The SEC’s requests are denied for several reasons, but overall, BAM accuses the SEC of exceeding its regulatory powers. His lawyers thus argue that the regulator has exceeded its powers and formulated vague, excessive and even “oppressive” requests.

Reading this document, there is little doubt that the stock exchange is particularly keen to maintain its confidentiality and, above all, does not want the SEC to stick its nose up where it is not legally authorized to do so. According to BAM, the SEC has not only requested documents related to its lawsuit; she has submitted a general request without any legal basis.

“BAM objects to these requests, which it considers excessive and unnecessarily burdensome in that they claim to require the production of ‘all’ or ‘some’ documents, while a subset of documents would be sufficient to provide the relevant information provide”, we can mainly read in the document.

Later in the document, the lawyers indicate that BAM objects to “redundant” requests, in addition to requests for documents that are no longer part of the company’s active data systems.

At the same time, attorneys say, other documents requested by the SEC benefit from the attorney-client privilege. Still others contain trade secrets or personal information about current or former BAM employees. Because of all these elements, the company is not required to file these documents with the SEC.

What is the attitude of both parties?

BAM and its lawyers are not challenging the SEC solely on procedural grounds, or because regulators are looking for documents that contain sensitive personal data.

On the contrary, the two sides disagree deeply on issues of legal and metaphysical truth.

Exhibit 4 clearly shows how far apart the SEC and Binance are on the issues in the proceeding, with both sides disagreeing on basic factual questions. As the following passage shows, what did or did not happen is deeply controversial.

“BAM opposes the requests insofar as they presuppose the existence of facts that do not exist or the occurrence of events that did not occur,” the file reads.

Will the courts, media and public listen attentively to BAM’s allegations of SEC abuse of power?

After a series of high-profile legal victories against the SEC, we still have to wait and see what effect these newly released documents will have. Inside the court, but also outside it.

Moral of the story: anything is possible for the SEC.


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