SEC Response: Binance.US Defense

Martin Walker
Sep 13, 2023 at 02:42 pm

Binance.US has issued a comprehensive response to the recent motion from the United States Securities and Exchange Commission, where they aim to compel certain actions and replies. In their response, Binance.US has expressed their view that the majority of the SEC's demands are, in their opinion, "unreasonable" and excessively burdensome.

On the 12th of September, legal representatives representing BAM Trading Services, the entity behind the Binance.US cryptocurrency exchange, submitted a set of confidential documents as a counter to the U.S. SEC's request for additional information from Binance.US.

The defendants have passionately argued that the SEC's requests for document production and interrogatories are exceedingly broad and, in their view, place an unwarranted burden on them, going beyond the intended scope as outlined in the consent order. BAM's legal team has strongly asserted that the SEC's insistence on absolute certainty, coupled with their demands for depositions of BAM CEO Brian Shroder and CFO Jasmine Lee, is unjustified.

BAM's legal representatives have maintained that the SEC's motion fails to establish any substantial connection between Shroder and Lee and the day-to-day management of custody and asset transfers at Binance.US.

"The CEO and CFO of BAM do not possess any unique insights regarding the specific matters outlined in the consent order's expedited discovery provision," the attorneys have stated. They have also highlighted that BAM had put forward numerous other witnesses who possess a more comprehensive understanding of BAM's operations, including BAM's Chief Information Security Officer, Erik Kellogg. The lawyers have stressed that "the burden imposed by these depositions far outweighs their potential benefit, and the discovery sought is disproportionate to the needs contemplated by the consent order."

Furthermore, BAM's legal team has raised the point that the SEC seems to lack sufficient evidence to substantiate their claims of misappropriation of customer assets. According to the defendants, the SEC's allegations forming the basis of its counter-motion to compel are misleading and inaccurate.

The lawyers have also underlined a significant discrepancy between what they perceive as the SEC's "overly broad and aggressive approach" and the limited expedited discovery that was initially agreed upon in the consent order.

It's worth noting that BAM's response comes shortly after the SEC and Binance agreed to a protective motion, which obligates both parties to submit confidential information under seal. This joint motion, filed on the 11th of September, commits to treating confidential and non-public information as protected material, with access restricted to individuals such as the judge, attorneys, plaintiffs, and defendants.

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