Binance.US filed a motion requesting a protective court order to restrict the scope of the SEC’s discovery demands in its lawsuit against the crypto exchange. In June, Binance.US entered a consent decree with the SEC after the agency tried freezing all company assets over security concerns about customer digital asset custody.
The consent order permitted the SEC limited discovery focused solely on the custody and availability of customer assets held by Binance.US. However, Binance.US argues the SEC’s discovery requests have now exceeded the agreed-upon scope in the consent order. The company maintains the SEC is engaging in an unjustified fishing expedition rather than sticking to the customer asset questions stipulated in the decree.
Binance.US asserts the SEC’s discovery demands have gone too far beyond what was settled on, amounting to inappropriate overreach. The company aims to limit the SEC back to the original consent order terms through a protective court order.
Specifically, Binance.US claims the SEC has spent 45 days serving unreasonably broad requests demanding every single document in Binance.US’s possession concerning customer assets. Binance.US contends the SEC wrongly believes the consent order provides unlimited access to investigate all aspects of asset custody practices without restraint.
In particular, Binance.US states the SEC demands expansive communications and deposition testimony from company executives on dozens of irrelevant topics, including the CEO and CFO who have minimal knowledge of the custody issues at the heart of the case.
Binance.US explains they have cooperated in good faith by supplying hundreds of documents, offering depositions from employees knowledgeable about asset security, and taking steps to ensure assets are in U.S. custody.
However, Binance.US argues the SEC has made unreasonable demands reflecting a pattern of exploiting the consent order’s discovery provision.
Crucially, Binance.US claims that despite years of investigation and information provided, the SEC still lacks any evidence customer assets were misused or mishandled.
Additionally, Binance.US contends deposing top executives would be unproductive, unduly burdensome, and disruptive. They suggest the SEC first depose the asset custody employees with more relevant knowledge.
In summary, Binance.US portrays the SEC’s approach as inappropriately broad given the limited discovery authorized on asset security matters, seeking information irrelevant to the case’s merits.
