Binance US Refuses SEC Document Requests Amid Ongoing Investigation

Binance US Fights Regulators' Data Demands, Citing Overreach and Disruption in Legal Battle Over Internal Documents. In a recent court filing on Monday, lawyers representing BAM Trading, the entity behind Binance US, contested the U.S. Securities and Exchange Commission's (SEC) requests for records, asserting that they are excessively broad and cause significant inconvenience for the exchange.

The SEC is seeking these documents to construct a case against BAM Trading, which it sued in June, accusing it of operating an unregistered securities exchange. The exchange has faced increased scrutiny ever since the U.S. Securities and Exchange Commission (SEC) initiated a lawsuit against it. 

U.S. Court Denies SEC's Request to Review Binance U.S. Documents

Amid the ongoing turmoil, the cryptocurrency exchange successfully held its ground against the SEC on September 18th. The regulatory body had previously requested an investigation into Binance US, contending that the Ceffu custody platform was closely tied to Binance and used for the improper transfer of funds from U.S. customers overseas, thereby breaching a prior agreement between the company and the SEC.

The SEC's specific interest lies in examining the exchange'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 custody of Customer Assets.”

BAM objects to the [SEC’s] request to the extent that they are vague, ambiguous, overbroad, lacking in particularity or oppressive,” BAM’s lawyers wrote in the filing.

The SEC has made extensive document requests from BAM, spanning from records related to how the company manages customer assets to statements verifying the company's reserves and overall financial well-being. However, the regulator claims that these requests have been consistently disregarded by BAM.

Among the inquiries was one linked to the exchange's purported utilization of a custody service called Ceffu to transfer funds belonging to U.S. customers overseas, which allegedly breaches the company's agreement not to engage in such actions.BAM’s lawyers, however, alleged those requests were “unduly burdensome,” forcing BAM to take on significant expenses, according to the filing.

Furthermore, the legal representatives claimed that certain documents either do not exist within the exchange's records or are considered to be outside the scope of relevance to the SEC's ongoing investigation.

It is common for companies facing inquiries from federal agencies to reject information requests, citing reasons such as excessive breadth or operational burden. While such resistance does not always result in success, it can lead to substantial delays in the progress of a case.

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