Judge Accuses SEC Of Overreach
Earlier this week, the SEC complained about the quality of information made available to its personnel, stating that Binance and its U.S. arm had only turned over about 250 pages of evidence, partially consisting of “unintelligible screenshots,” in spite of the exchange’s agreement to provide evidence. The company has also made efforts to block executives from going on the stand, according to the regulator.
The U.S. court’s response, however, was less favorable than expected by the SEC.
In fact, Magistrate Judge Zia Faruqui accused the agency of going on a “fishing expedition” and firing off broad requests for information with an uncertain relation to the case at hand.
Internal Software Off-Limits For Now
A main point of contention between Judge Faruqui and the SEC pertains to the internal software of Binance and that of its U.S. arm, Binance U.S.
The SEC claims that this software could prove that both entities are far more closely linked than they claim. In fact, if the SEC’s accusations are true, it could even mean that U.S. customer assets are being held abroad, which is one of the agency’s main accusations against the exchange.
As a result, the Commission requested that Judge Faruqui allow an inspection of Binance’s internal workings and force them to hand over other bits of information that the exchange had balked at, according to Bloomberg.
However, the request was denied – for now. Instead of making such broad documentation attempts, the SEC should formulate more tailored requests for information and interview additional witnesses, according to the judge.
“I am not inclined to allow the inspection at this time. At some point, we are going to have to bite the bullet and move on with the case.”
The request was also commented on by WilmerHale lawyer Matthew Martens, who is part of the team representing Binance.US in court.
“We have responded to every (targeted request) by the SEC. What we are not going to respond to is the foolishness of document requests that came from the government here.”
The case will go on with the information provided so far, with the possibility of additional discovery still open if warranted by the situation.
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