The US Securities and Exchange Commission (SEC) is contemplating a virtual inspection of Binance.US’s technological infrastructure, systems, and software.
The SEC and the defendants filed a joint status report with the court in the lawsuit involving Binance and Binance.US as defendants, along with co-founder Changpeng ‘CZ’ Zhao, the plaintiff.
The defendants provided documents and participated in depositions throughout the legal proceedings.
Additionally, a plan is in place for a proposed inspection of Binance.US slated for the coming week.
Joint Status Report by Binance and the SEC
The most recent joint status report filed with the court indicates full cooperation from the defendants, Binance.US and co-founder Changpeng Zhao, by the June consent order.
Binance.US informed the court of its compliance with document requests and deposition per the requirements of the SEC.
Before the next court status report submission, both parties have agreed to resolve any document discovery and deposition disputes.
The SEC and Binance have committed to submitting the subsequent status report on January 25, 2024.
Also, Binance.US has proposed an inspection scheduled for 7 pm ET on December 21.
Previously, the court denied inspection requests.
Magistrate Judge Faruqui emphasized that the SEC needs to refine its requests and communicate with additional witnesses more specifically. Binance.US also opposed the escalating document discovery and deposition demands put forth by the SEC.
Binance.US Engages Five Specialized Attorneys
A team comprising five attorneys—Sheehan H. Band, Levi Giovanetto, Daniel J. Davis, Christian Kemnitz, and David Luger submitted individual notices of appearance to represent BAM Management US Holdings and BAM Trading Services (Binance.US) in the ongoing legal proceedings before the court.
This move signals a concerted effort by the entities involved to bolster their legal representation and stance in response to the litigation brought forward by the SEC.
In a recent development, the defendants—namely, Binance Holdings, Binance.US, and co-founder Changpeng Zhao made an official plea to Judge Amy Berman Jackson, seeking the dismissal of the lawsuit with prejudice.
The parties predicated their arguments on the idea that the allegations of violating securities laws lacked logic and were not adequately supported.
Their request to dismiss the case highlights how strongly they disagreed with the SEC’s accusations, emphasizing their belief that these claims are unfounded and lack credibility.
Allegations made by SEC Against Binance.US
At the center of this legal dispute lies the SEC’s allegations against Binance.US, Binance Holdings, and Changpeng Zhao, asserting violations of securities regulations.
In response, Binance presented a robust counterargument, contending that the SEC lacks a comprehensive understanding of the intricate workings of cryptocurrencies.
Binance argues that the SEC’s regulatory approach is misaligned and imposes rules that fail to accommodate the distinct digital asset characteristics.
The crux of Binance’s defense revolves around scrutinizing the application of the Howey Test, a benchmark used to determine whether something qualifies as a security.
Binance’s legal team contends that the SEC is misapplying this test in the context of cryptocurrencies.
According to Binance, the SEC’s attempt to fit cryptocurrency transactions into the framework of traditional securities laws is flawed and sets aside the unique aspects of digital assets, their decentralized nature, and the innovative technology behind them.
Moreover, Binance’s defense argues that the SEC’s approach restricts the growth and evolution of the cryptocurrency market.
They assert that the attempt to regulate digital assets using outdated rules creates uncertainty and hampers innovation within the burgeoning industry.
In essence, Binance’s position rests on the assertion that the SEC’s application of traditional securities regulations to cryptocurrencies is inadequate and stifles the potential growth and innovation within the digital asset space.
The defense emphasizes the need for a more nuanced and adaptable regulatory framework that aligns with the dynamic nature of cryptocurrencies and their rapidly evolving market landscape.