A federal judge denied the U.S. securities regulator's request to investigate Binance US's technological infrastructure, which was a setback for the government. The top cryptocurrency exchange's American subsidiary is allegedly not cooperating with the SEC's investigation, according to the SEC.
U.S. SEC Cannot Get Court Approval to Check Binance US Software
According to Bloomberg, US securities authorities failed to persuade a judge to grant them quick access to the crypto trading platform Binance US's software as part of their case against the domestic branch of the largest digital asset exchange in the world.
The SEC noted that since filing suit in June against the business, its worldwide subsidiary, and Binance founder and CEO Changpeng Zhao, it had been difficult to get information from it. The Commission again attempted to compel the company to give more of the necessary information on September 18.
The SEC said in its filing that Binance US had disobeyed a consent order mandating it to turn over records pertaining to the custody and control of customer cryptocurrency money. The agency asserts that the exchange has provided fewer than 250 documents and just three potential deposition witnesses.
At a hearing on Monday, federal Magistrate Judge Zia Faruqui said he wasn't "inclined to allow the inspection at this time." Additionally, he stressed that the SEC should interview more witnesses and submit more specific witness requests.
The SEC has suffered a procedural setback as a result of Faruqui's decision to refuse the agency instant access to Binance US's systems. The agency had earlier this year claimed that Binance and Binance US, which was established in 2019 to service U.S. consumers, were not truly independent.
The SEC is interested in looking into the technologies used by Binance US to spot potential connections to the international marketplace. The regulator stresses that it is also crucial to guarantee that the Miami-registered business maintains control over client assets during the legal proceedings.
As of now, Binance US has fought attempts to have its executives deposed on the grounds that they lack firsthand knowledge of the security and custody of customer cash, and its attorneys have criticized the SEC's request for documentation as being "overbroad."
While Binance was able to escape having the assets of its U.S. platform frozen in mid-June, the legal dispute with the SEC had a significant negative impact on its American business. The platform's monthly trade volume has decreased 98% from January 2022 as of this month, according to the most recent statistics from researcher Ccdata.
The exchange had to restrict U.S. dollar deposits early this year due to problems with its banking partners. It also disclosed that it is switching to cryptocurrency-only trading and that it has let go of a handful of staff.
Brian Shroder, CEO of Binance US, as well as Krishna Juvvadi and Sidney Majalya, heads of legal and risk, recently left their positions in the midst of yet another round of layoffs that saw the exchange's personnel reduced by a third.
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