A federal magistrate judge has denied the SEC's request to gain immediate access to Binance.US's software, asking the regulator to provide more specific requests for discovery.
The United States Securities and Exchange Commission (SEC) has failed to win immediate access to Binance.US's software in a Sept. 18 hearing, with the judge saying he isn't “inclined to allow the inspection at this time.”
The hearing was held to discuss SEC’s motion to compel Binance to hand over detailed information and make its executives more available for depositions, which has been a point of contention between the two over the past week.
In a hearing, Judge Faruqui said that he wasn’t “inclined to allow the inspection at this time.” Alternatively, he proposed that the SEC should come up with more specific requests for discovery and speak with a broader range of witnesses, according to a Sept. 18 Bloomberg report.
The SEC has repeatedly claimed that it has been struggling to get information from Binance.US since it sued the American arm of the crypto exchange, along with its international affiliate Binance Holdings Ltd and CEO Changpeng "CZ" Zhao on June 5 for its alleged involvement in the sale of unregistered securities.
On Sept. 15, the SEC accused Binance.US of noncooperation in the investigation, with the regulator highlighting that Binance.US's holding company BAM Trading had produced only 220 documents during the discovery process.
A large portion of these documents “consist of unintelligible screenshots and documents without dates or signatures,” the SEC said. The regulator added that BAM has refused to produce essential witnesses for deposition, instead agreeing only to four depositions of witnesses it had deemed appropriate.
However, Binance has previously characterized the SEC's repeated requests for discovery as “unduly burdensome," while the SEC claimed that Binance is being uncooperative despite agreeing to a consent order on discovery in the SEC’s case against it for unregistered securities operations and other allegations.
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Judge Faruqui's decision to deny the SEC immediate access to Binance.US's software and other documentation is a partial setback for the regulator in its ongoing case against the exchange.
The custody of Binance.US customer assets is one of the central concerns that the SEC has with the crypto exchange — with the regulator claiming that Binance.US must be investigated more thoroughly to tease out potential links to the global arm of the exchange.
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