Binance’s U.S. Exchange Bucks SEC’s Document Requests Amid Investigation

The crypto exchange is fighting to avoid handing over certain documents to the regulator, arguing the SEC’s requests are “overbroad.”

AccessTimeIconSep 18, 2023 at 8:33 p.m. UTC
Updated Sep 19, 2023 at 3:01 p.m. UTC

Binance’s U.S. entity is pushing back against regulators’ requests for records pertaining to its business practices, intensifying a legal tug-of-war over the company’s internal documents, a Monday court filing shows.

In the filing, BAM Trading’s lawyers alleged the U.S. Securities and Exchange Commission’s document requests are “overbroad” and too much of an “inconvenience” for the exchange to honor. The SEC is requesting the documents to build its case against BAM (the operating company for Binance.US), which it sued in June for allegedly operating an unregistered securities exchange.

“BAM objects to the [SEC’s] requests to the extent that they are vague, ambiguous, overbroad, lacking in particularity or oppressive,” BAM’s lawyers wrote in the filing.

The SEC has requested a wide range of documents from BAM, from records of the company’s handling of customer assets to statements attesting to the company’s reserves and general financial health. But, those requests have been duly ignored, the regulator alleged.

One of the requests was tied to the exchange’s alleged use of a custodying service called Ceffu to move U.S. customers’ funds abroad in violation of the firm’s agreement to refrain from doing so.

BAM’s lawyers, however, alleged those requests were “unduly burdensome,” forcing BAM to take on “significant expense[s],” according to the filing. In addition, some of the documents are either not in the exchange’s possession or fall “outside the scope” of what is pertinent to the SEC’s investigation, the lawyers alleged.

It is common for firms under investigation by federal agencies to deny requests for information on the grounds that they are too broad or cumbersome for their staff. And, while the pushback is not always successful, it can create significant delays in a case.

Still, regulators have not yet shown signs of letting up on their demands. Earlier Monday, the SEC filed a complaint alleging that BAM had “slow-rolled small productions of documents and information, and stonewalled on entire categories of information” to hinder the agency’s investigation into the exchange’s custodying of customer assets.

Edited by Nikhilesh De.


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Elizabeth Napolitano

Elizabeth Napolitano is a news reporter at CoinDesk.

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