U.S. court has rejected the SEC's bid to investigate Binance U.S., with the cryptocurrency exchange maintaining its position and labeling the regulatory agency's request as 'excessive.
The U.S. District Judge has denied the SEC's plea to examine documents pertaining to Binance U.S., specifically those related to its interactions and communications with custodial service providers.
Binance U.S, the U.S. division of the world's largest cryptocurrency exchange, Binance, celebrated a minor victory today. The crypto exchange has been under intense scrutiny since the U.S. Securities and Exchange Commission (SEC) initiated legal action against it. While the firm experienced a decline in trading volume and saw key members of its executive team depart, it found a glimmer of success amidst these challenges.
The SEC's Legal Battle With Binance
U.S. took a significant turn today amid the ongoing saga. The cryptocurrency exchange successfully defended itself against the SEC's request for an investigation on September 18.
The SEC's case rested on allegations that the Ceffu, a custody platform, was intricately tied to Binance and was employed to transfer funds belonging to U.S. customers out of the country.
This action was viewed as a violation of a prior agreement between the company and the regulatory agency. Specifically, the SEC sought access to the company's records and communications with its wallet custody service providers, as stated in the filing.
“But even this limited discovery has revealed that BAM still cannot credibly explain its crypto asset wallet custody arrangements. And BAM has continued to provide the SEC with conflicting information concerning Defendant Binance Holdings Limited’s (“BHL” or “Binance”) role, and that of a Binance-related entity called “Ceffu,” in the custodying of Customer Assets.”
The Court's Position Was Clearly Stated
The court firmly expressed its position in response to recent developments. Despite the cryptocurrency exchange's claim that the SEC's request was excessive and burdensome, the U.S. D.C. District Judge, Zia Faruqui, ultimately denied the SEC's request for an inspection.
Nonetheless, the court did request the cryptocurrency exchange to provide additional documentation. Judge Faruqui also expressed doubts regarding the exchange's control over its assets.
Photo by Vadim Artyukhin on Unsplash
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