The American branch of Binance is currently at the center of a growing legal dispute, resisting the SEC’s requests for a plethora of documents related to its operational practices, as highlighted in a recent court filing on Monday. Lawyers representing BAM Trading, the company overseeing the exchange, argue that the SEC’s requests are not only ‘too extensive’, but also present a significant inconvenience for the business, exacerbating the battle over the firm’s internal documents.
Allegations of Operating an Unregistered Securities Exchange
This struggle with the SEC stems from allegations made in June, accusing BAM of operating an unregistered securities exchange. In an effort to strengthen its case, the SEC has requested a wide range of documents from BAM, encompassing records on the management of the company’s clients’ assets to statements verifying the firm’s financial reserves and overall fiscal health. According to the SEC, these requests have largely been ignored by BAM.
The regulator’s investigation is particularly focused on the exchange’s alleged use of a service called Ceffu to transfer funds from US customers abroad, in violation of the firm’s commitment to refrain from such activities. However, the allegations have been met with strong resistance from BAM’s legal team.
BAM’s Defense: Vagueness and Undue Burden
In response to the SEC’s request, BAM’s lawyers argued that the regulator’s queries are ‘unduly burdensome’ and result in ‘significant expenses’ for the company. They asserted that several of the requested documents are not in the exchange’s possession or ‘fall outside the scope’ of what is relevant to the SEC’s investigation, as mentioned in the court-filed document.
Despite the company’s reluctance, the SEC shows no signs of relenting in its demands. Earlier on Monday, it filed a complaint, alleging that BAM deliberately delayed the production of certain documents and information, and hindered access to entire categories of information, thereby obstructing the regulator’s investigation into the exchange’s asset custody protocols.
