U.S. SEC and Binance clash over unregistered securities lawsuit over need to submit evidence

Joint Report in SEC vs. Binance Lawsuit

On the 25th, the U.S. Securities and Exchange Commission (SEC) and leading crypto exchange Binance filed a joint status report in the U.S. District Court of Columbia in the ongoing case.

The content indicates that the two sides are arguing over the necessity of submitting documentary evidence and hearing testimony.

The SEC says BAM Trading, the operator of Binance US, has not yet submitted important documents. On the other hand, BAM Trading insists that there is no shortage of documents it has prepared so far.

BAM Trading says it intends to prepare final documents in response to the SEC’s expedited discovery request next week.

Both the SEC and Binance proposed identifying outstanding issues in the next status report to be filed on February 15th.

connection: Growth areas of the virtual currency market that Binance will focus on in 2024, such as the Bitcoin ecosystem and DePIN

The lawsuit filed by the SEC against Binance is mainly about what is defined as a “security.” For example, the SEC alleges that Binance’s token marketing efforts suggest that investors have an expectation of return similar to that of investing in securities.

The Wall Street Journal also reported in November that the SEC believes Binance had a backdoor that could have taken control of customer assets and is looking for evidence of that.

connection: Oral argument in Binance vs. SEC case focuses on the securities nature of virtual currencies

About subpoenaing witnesses

Additionally, the SEC has the right to request additional testimony from BAM Trading staff. However, BAM Trading argued that the SEC had already interviewed more than a dozen witnesses during expedited discovery and had no right to request additional interviews.

The SEC and Binance will continue to hold discussions and work to narrow down their differences regarding hearing testimony before the next status report to the court.

Last November, Global Binance and its former CEO Changpeng Zhao (CZ) reached a settlement with the US Treasury Department and Department of Justice after admitting to violating anti-money laundering regulations and sanctions regulations.

However, no settlement has yet been reached with the US SEC, and the lawsuit continues.

connection: US District Court accepts guilty plea from former Binance CZ CEO

As part of the settlement, CZ will step down as CEO of Binance in November 2023. Sentencing for Mr. CZ is scheduled for February 23rd.

In December of last year, a US court ruled that CZ must remain in the US pending his sentencing.

A magistrate initially ruled that CZ could return to his family in Dubai, United Arab Emirates (UAE), pending sentencing. However, prosecutors opposed this, claiming that CZ was a flight risk. A federal district court judge appears to agree.

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