Binance's US Exchange Resists SEC's Document Requests During Investigation

Police & Regulations
Sep 19, 2023 at 11:38 am

Binance's U.S. division is contesting the SEC's request for specific documents, arguing that the regulatory body's demands are overly broad.

In a legal filing submitted on Monday, attorneys representing BAM Trading, the operational entity behind Binance.US, contend that the U.S. Securities and Exchange Commission (SEC) has issued document requests that are characterized as "excessively broad" and pose an "inconvenience" for the exchange to comply with. The SEC is pursuing these documents in connection with its lawsuit against BAM, filed in June over allegations of operating an unregistered securities exchange.

"BAM disputes the [SEC's] requests to the extent that they lack clarity, are ambiguous, overly expansive, devoid of specificity, or oppressive," the legal team for BAM asserted in the filing.

The SEC's document requests to BAM encompass a wide range, from records concerning the management of customer assets to confirmations about the company's reserves and overall financial health. However, the regulator contends that these requests have been intentionally disregarded.

One of the inquiries centers on the purported use of a custody service called Ceffu by the exchange for transferring funds of U.S. customers abroad, potentially breaching the agreement to refrain from such actions.

Nonetheless, BAM's legal representatives argue that these requests are unreasonably burdensome and entail "significant expense[s]" for BAM, as detailed in the filing. Additionally, some of the documents are either not within the exchange's possession or fall beyond the scope of relevance to the SEC's investigation, according to the attorneys.

It is customary for firms undergoing investigations by federal agencies to contest information requests on grounds of being overly broad or impractical for their staff. While such resistance is not always successful, it can lead to substantial delays in a case.

Despite this resistance, regulators have not signaled any intention to relent in their demands. Earlier on Monday, the SEC lodged a complaint alleging that BAM had engaged in "slow-rolled small productions of documents and information, and stonewalled on entire categories of information" in an effort to hinder the agency's inquiry into the exchange's custody of customer assets.

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