Binance Irked by SEC’s Move to Query CEO of US Affiliate

<p>Binance has
criticised the US Securities and Exchange Commission (SEC) for reportedly
making “incredibly overbroad” and “unreasonable”
demands for information over the past 45 days. The regulator’s discovery
requests include demands that the Chief Executive Officer (CEO) and the
Chief Financial Officer (CFO) of BAM Trading, the crypto exchange’s
US affiliate, alongside at least four other senior
executives, be
made available for depositions or pre-trial testimony. </p><p>SEC Is Conducting
‘Fishing Expedition’: Binance</p><p>According
to Binance, which <a href="https://storage.courtlistener.com/recap/gov.uscourts.dcd.256060/gov.uscourts.dcd.256060.95.0.pdf" target="_blank" rel="follow">filed for a protective
order</a> against
the SEC yesterday (Monday), the consent order given to the SEC by the district
court in Columbia in mid-June, only provides for “limited expedited discovery”
related to the affiliate’s possession, custody and control of customer
assets. </p><p>To fulfil
this order, the crypto exchange said it gave the
regulator the option of interviewing or deposing Sara Sisenwein, BAM’s Senior Director of Treasury
Operations, and/or Erik Kellogg, BAM’s Chief Information Security Officer. It noted
that both executives, who have “extensive firsthand knowledge” about US customers’ assets, submitted detailed declarations about the assets to
the securities agency. </p><p>However,
instead of taking advantage of the exchange’s proposal, the SEC is reportedly
demanding that Binance provide at least six senior executives of BAM Trading
for the pre-trial testimony. Responding, Binance claimed that the CEO and CFO
of the crypto exchange’s local unit in the US do not have “unique firsthand
knowledge” about customer assets. </p><p>Furthermore, the exchange disclosed that the SEC is demanding that BAM produce ‘all communications’
concerning dozens of subjects dating as far back as November 2022. The
exchange said many of the topics “have nothing to do with customer assets.”</p><p>“BAM has
worked in good faith, but the SEC has been steadfast in its belief that the
consent order gives it carte blanche to investigate every aspect of BAM’s
asset custody practices without any discernible limitation whatsoever,” Binance
stated in <a href="https://storage.courtlistener.com/recap/gov.uscourts.dcd.256060/gov.uscourts.dcd.256060.95.0.pdf" target="_blank" rel="follow">the court
filing</a>.</p><p>“At the bottom,
the SEC is conducting a fishing expedition instead of seeking the narrow and
‘limited’ discovery authorized by the consent order to ensure customer assets
are presently secure and available,” the digital
asset exchange
added, further noting that the regulator is yet to identity “the slightest evidence”
that digital assets belonging to US customers “have been misused or mishandled
in any way.”</p><p>Binance Faces Heat in the US</p><p>The request
for a protective order is the latest in the SEC’s ongoing legal battle against
the leading crypto exchange over its operations in the United States. In early
June, the securities watchdog <a href="https://www.financemagnates.com/cryptocurrency/sec-charges-binance-ceo-over-illegal-exchanges-commingling-of-client-fund/" target="_blank" rel="follow">sued the exchange</a>, alleging that the firm was
operating an illegal trading platform, offering unregistered crypto asset
securities and <a href="https://www.financemagnates.com/cryptocurrency/binance-jumbled-customer-funds-with-company-revenue-report/" target="_blank" rel="follow">commingling customers’ funds</a>.</p><p>The US
Department of Justice is <a href="https://www.financemagnates.com/cryptocurrency/doj-weighs-fraud-charges-against-binance-worried-about-bank-run-report/" target="_blank" rel="follow">also considering
whether to bring criminal charges</a> against the exchange, even as two US lawmakers
called on the government law enforcement agency to look into whether Binance
made false representations to lawmakers earlier in March about its business
dealings and ties to its local unit.</p><p>Separately,
the Commodity Futures Trading Commission (CFTC) <a href="https://www.financemagnates.com/cryptocurrency/cftc-sues-binance-for-illegal-derivatives-exchange-numerous-violations/" target="_blank" rel="follow">also dragged Binance to
court</a>, raising
similar allegations against the exchange and its CEO, Changpeng Zhao. However,
the digital asset firm <a href="https://www.financemagnates.com/cryptocurrency/binance-takes-on-cftc-with-plans-to-seek-dismissal-of-lawsuit/" target="_blank" rel="follow">plans to seek the
dismissal of the charges</a>.</p><p>SEC Delays
Decision on ARK Invest’s Spot BTC ETF</p><p>Meanwhile,
the SEC recently <a href="https://www.sec.gov/files/rules/sro/cboebzx/2023/34-98112.pdf" target="_blank" rel="follow">pushed forward the
deadline</a> to make a
decision on ARK 21Shares, a spot Bitcoin (BTC) exchange-traded fund (ETF), by
opening a 21-day public comment widow on the proposed instrument. ARK 21Shares
was jointly proposed by asset manager, ARK Invest, and crypto exchange-traded
product (ETP) issuer, 21Shares.</p><p>In recent
months, the regulator <a href="https://www.financemagnates.com/cryptocurrency/ark-invest-joins-blackrock-and-fidelity-in-race-for-bitcoin-etf/" target="_blank" rel="follow">received several
applications</a> for spot
BTC EFTs. A similar application <a href="https://www.financemagnates.com/cryptocurrency/blackrock-seeks-approval-for-a-spot-bitcoin-etf-in-the-us/" target="_blank" rel="follow">submitted in mid-June
by BlackRock</a>, the
world’s largest asset manager, boosted institutional interest in the
instrument, <a href="https://www.financemagnates.com/" target="_blank" rel="follow">Finance Magnates</a> reported. </p><p>Devexperts updates DXcharts; FCA warns against seven companies; <a href="https://www.financemagnates.com/forex/news-nuggets-15-august-devexperts-updates-dxcharts-fca-warns-against-seven-companies/" target="_blank" rel="follow">read today's news nuggets</a>.</p>

This article was written by Solomon Oladipupo at www.financemagnates.com.