May 29, 2024

The SEC has witnessed a drawback in its lawsuit against Binance and its US subsidiary arm, BinanceUS. The regulator had requested a court motion permitting it to inspect Binance US. However, the table turned against the SEC as a federal magistrate judge denied the request on Monday, September 19.

Federal Magistrate Denies SEC Request, Preventing Further Access

On September 14, the SEC filed an inspection request on Binance US. The regulator alleged that the exchange is opposing its investigations through several moves. According to the SEC’s filing, the exchange had earlier refused to provide any relevant document, forcing the agency to get needed information from other sources. 

Moreover, the SEC stated that Binance has been releasing an excess of irrelevant information. It noted that Binance US had provided only 220 documents for its scrutiny, comprising mostly unintelligible screenshots with no dates or signatures. 

The regulator expected the filing to place Binance under intense scrutiny should the court validate its demand. It anticipated a court grant to impose immediate access to the exchange’s technology platform.

Additionally, the securities regulator’s demand is meant to compel Binance US to release more documents and witnesses for the agency’s tighter regulatory measures. Also, the SEC alleged that Binance US provided misleading information regarding its relationship with Ceffu, formerly Binance Custody. 

The agency maintained that Ceffu is one of Binance’s affiliated entities as against the exchange’s contrary statement in court. But, according to a report from Bloomberg, Federal Magistrate Judge Zia Faruqui stated that he’s not inclined to approve such an inspection.

Further, the judge encouraged the SEC to always be specific in its regulatory requests to Binance US and include more witnesses. On its end, the SEC had argued that Binance restricted it to only four witnesses. It mentioned that its request for additional personnel received a negative response from the exchange.

However, the court ruling has restricted the securities regulator any investigatory access to Binance US software.

Binance US Records Drastic Drop in Trade Volume Amid SEC’s Lawsuit

Due to the SEC’s ongoing lawsuit against Binance US, the crypto exchange has recorded a drastic drop in trade volumes and overall operations. 

Data from Kaiko Research showed that Binance US’ weekly trade volume dipped from a yearly high of almost $5 billion to $40 million. Also, the exchange’s key executives have been resigning recently, reducing the workforce even amid its legal battle with the SEC. 

According to The Wall Street Journal, Brain Schoder (CEO), Krishna Juvvadi  (Head of Legal), and Sidney Majalya (Chief Risk Officer) all exited the firm last week.

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