Binance and the U.S. Securities and Exchange Commission (SEC) continue to face disputes over the presentation of evidence and witness testimony in the SEC's case against the cryptocurrency exchange, according to court documents. The joint status report filed on January 25 reveals ongoing disagreements, with the SEC highlighting "important aspects" of BAM Trading Services' (parent company of Binance.US) findings. The SEC has made extensive evidence requests, particularly regarding asset custody and liquidity, sparking controversy around Binance.US having a potential backdoor similar to FTX for controlling customer assets.
In response, BAM's lawyers asserted that they had fully complied with document production requirements outlined in the consent order and expedited recovery request. They urged the court to acknowledge BAM's completion of its obligations, emphasizing the harm and burden caused by the SEC's Temporary Restraining Order (TRO) and accelerated discovery methods over the past seven months. A consent order delineates the SEC's investigatory scope, and BAM argued that the SEC's inquiry should focus on confirming the security and proper accounting of customer assets, accusing the regulator of exceeding these bounds.
The filing also highlighted disputes over witness examination, including requests for testimony from "BAM's former CEO and CFO" (presumably Brian Shroder and Jasmine Lee) and discussions about examining Binance co-founder Changpeng Zhao. BAM contested the SEC's authority to demand additional testimony from current or former BAM personnel, noting the SEC had already taken depositions of over a dozen witnesses during expedited discovery. The ongoing disagreements between lawyers for BAM and the SEC extend to the scope, timing, location, and amount of testimony, reflecting the complexity of the legal proceedings.
Changpeng Zhao, who resigned as Binance CEO in November 2023 as part of a $4.3 billion settlement with U.S. regulators, may undergo examination. Zhao's sentencing is scheduled for February 23, 2024, and he faces up to 18 months in prison. The next status report in the case is expected on February 15. Despite Zhao being out on $175 million bail, the legal battles underscore the challenges faced by Binance and its executives in dealing with regulatory scrutiny in the U.S.
