The Federal judge presiding over the civil case between the Securities and Exchange Commission (SEC) and Binance's entities has decided to refer the matter to the magistrate court. The legal matter is part of the recent development where Binance.US, the American arm of the global cryptocurrency exchange Binance, has initiated a legal battle that could reshape its ongoing dispute with the regulator.
According to a report by Cointelegraph, Federal Judge Amy Berman Jackson referred the pivotal motion to Magistrate Judge Zia Faruqui for deliberation yesterday (Wednesday). At the center of the legal tussle lies the SEC's demands for information from Binance.US, specifically regarding the custody, security, and availability of users' assets.
While the regulator insists that this information is pertinent to its case filed in June, which revolved around alleged unregistered securities offerings, Binance.US contends that such requests are not relevant to the legal matter.
Strategic Defensive Move?
On August 14, Binance.US's legal team lodged a motion for a protecting order, highlighting its order to counteract the SEC's purported 'fishing expedition', a term describing broad information requests by the regulator. The company's parent company in the US, BAM Trading, along with BAM Management, filed the protective order in the US District Court of Columbia.
According to Binance, it has already provided sufficient information to the regulatory body, and the protective order aims to curb the SEC's demands. As stated by Reuters, the exchange aims to limit the number of depositions from BAM's employees to four, and it intends to drop the depositions of BAM's Chief Executive and Chief Financial Officer.
Legal Battles on Multiple Fronts
The legal battle between Binance and the SEC stems from a lawsuit filed in June by the US regulator, accusing the exchange and its CEO Changpeng Zhao of orchestrating a "web of deception." The lawsuit encompasses a range of allegations, including claims that Binance inflated trading volumes, diverted customers' funds, and failed to restrict US customers from its platform.
In June, Finance Magnates reported that Binance.US and the SEC have entered into negotiations aimed at preventing a comprehensive freeze of the exchange's assets. The objective of the negotiations was to strike an agreement that safeguards investors' funds while allowing the exchange to continue with its operations under the regulator's watch.
Meanwhile, Binance has faced a downturn in market share due to ongoing regulatory battles. According to CCData, exchanges rated as top tier by the industry research provider, which signifies robust protection measures for customers' funds and security standards, have collectively seen a decline in market share from 80% to around 68% since the year began.
