Binance Seeks Protection From US Financial Regulator


Crypto exchange Binance files for court protective order against US SEC, alleging regulator requests were “unduly burdensome”

Binance has hit back at the US financial regulator, after it had filed lawsuits against the cryptocurrency exchange.

Back in June, the US Securities and Exchange Commission (SEC) filed lawsuits against both Coinbase and Binance, as well as against the later’s founder and CEO Changpeng Zhao.

Prior to that it was reported that a senior Binance executive allegedly had primary control over five bank accounts belonging to the cryptocurrency firm’s supposedly independent US affiliate.

Binance chief executive Changpeng Zhao. Image credit: Binance

SEC lawsuit

The SEC had listed 13 charges against Binance, Zhao and the operator of its purportedly independent US Exchange.

The SEC alleged that, while Zhao and Binance publicly claimed that US customers were restricted from transacting on, Zhao and Binance in reality subverted their own controls to secretly allow high-value US customers to continue trading on the platform.

Furthermore, the SEC alleged that, while Zhao and Binance publicly claimed that Binance.US was created as a separate, independent trading platform for US investors, Zhao and Binance secretly controlled the Binance.US platform’s operations behind the scenes.

The SEC also alleged that Zhao and Binance exercise control of the platforms’ customers’ assets, permitting them to commingle customer assets or divert customer assets as they please, including to an entity Zhao owned and controlled called Sigma Chain.

The SEC’s complaint further alleged that BAM Trading and BAM Management US Holdings, Inc. (“BAM Management”) misled investors about non-existent trading controls over the Binance.US platform, while Sigma Chain engaged in manipulative trading that artificially inflated the platform’s trading volume.

And the SEC alleged that the defendants concealed the fact that it was commingling billions of dollars of investor assets and sending them to a third party, Merit Peak Limited, that is also owned by Zhao.

Protective order

But Binance is pushing back against the US financial regulator, and on Monday filed for a protective court order against the SEC.

According to Reuters, Binance alleges the SEC requests for information were “over broad” and “unduly burdensome.”

The court filing was made in the US District Court of Columbia, where BAM Trading, Binance US’s operating company and BAM Management said the group had already provided sufficient information to the regulator, Reuters reported.

It seems the protective order tries to limit the SEC, among other things, to four depositions from BAM employees, and to drop the deposition of BAM’s chief executive and of its chief financial officer, without naming anyone.

Binance and the SEC did not immediately respond to a request for comment, Reuters reported.

“…the SEC has still yet to identify any evidence suggesting that customer assets were misused or dissipated in any way,” the filing said.

The SEC has declined BAM’s proposals to meaningfully limit its requests, Reuters reported, and is opposed to the motion for a protective order, the filing said.