Judge Issues Order on Latest Filings in Binance and SEC Legal Battle

Binance and the US Securities and Exchange Commission (SEC) are facing off in an ongoing legal battle, with new developments emerging. Magistrate Judge Zia M. Faruqui has set a hearing date for two important motions in the case. The hearing is scheduled for September 18, 2023, at 1:00 PM ET and will address Motion 95, the Protective Order, and Motion 102, which seeks to compel and reply in further support of BAM Defendants’ Motion for a Protective Order (Redacted). These motions were filed by BAM Management and BAM Trading Services, affiliates of Binance US.

John Reed Stark, former Chief of the SEC Office of Internet Enforcement, provided insight into the case, highlighting the efforts of Binance’s US affiliate, Bam Trading, to prevent the SEC from deposing its CEO and CFO. Stark emphasized the timing of the CEO’s resignation coinciding with potential whistleblowers and noted Binance’s protective order against the SEC, arguing that the commission’s discovery requests were “overly broad” and “unduly burdensome.”

This recent motion should not be confused with two other significant filings. On September 11, 2023, the SEC, Binance Holdings Limited, BAM Trading Services, BAM Management, and CEO Changpeng ‘CZ’ Zhao jointly sought a protective order to restrict access to potentially sensitive documents labeled as either “Confidential” or “Highly Confidential – Attorneys’ eyes only.” Additionally, the SEC filed a motion on August 28, 2023, to file documents under seal, supported by 37 submissions, including a declaration from SEC trial attorney Jennifer Farer.

Stark also commented on the unusual nature of BAM Trading and BAM Management’s request to limit the SEC’s depositions to only four BAM employees and exclude six key witnesses, including BAM’s CEO Brian Shroder and CFO Jasmine Lee. He drew on his experience in the SEC Enforcement Division, expressing skepticism as he couldn’t recall a similar situation during his tenure.

In a surprising turn of events, BAM’s President and CEO, Brian Shroder, resigned from the company on the same day that Binance’s lawyers filed a motion opposing the SEC’s deposition of him. Following Shroder’s departure, Binance US’s chief legal officer, Norman Reed, reportedly assumed his role.

Amidst these developments, Binance US announced significant layoffs, cutting over 100 positions, equivalent to one-third of its staff. CEO Changpeng Zhao attributed these layoffs to the SEC’s actions, claiming that the commission’s attempts to “cripple our industry” have had real consequences on American jobs and innovation.

Stark speculates that the SEC and the US Department of Justice (DOJ) may find opportunities to secure cooperation from Mr. Shroder, especially if he fears criminal prosecution. Moreover, the recent layoffs at Binance could potentially provide the SEC with whistleblowers incentivized by the possibility of substantial financial rewards.

The upcoming hearing on September 18 is expected to be a crucial moment in the case, as the court will address key motions that could shape the trajectory of the legal battle between Binance and the SEC.

At press time, BNB (Binance’s native cryptocurrency) was trading at $211, slightly above a critical support level.

BNB hovers above key support, 1-week chart | Source: TradingView.com

Featured image from CNBC, chart from TradingView.com

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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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