A week after the Securities and Exchange Commission (SEC) filed a civil enforcement action against Binance.US, the crypto exchange has hit back, stating that all of the regulator’s claims are invalid.
Binance argued against the SEC for a temporary restraining order on the company, also known as BAM Trading, and said that such an action would have “destructive consequences,” which will subsequently affect the platform’s ability to even fund its defense to this action.
Binance Hits Back
In its latest filing, Binance’s US affiliate argued that the agency has not identified a single security trading on BAM’s platform. The request for a restraining order would primarily harm BAM’s customers, effectively put BAM out of business, and subsequently, prevent the company from defending itself in this litigation.
Deeming the SEC’s request as “draconian and unduly burdensome,” Binance.US said the move would hinder the ability to pay its employees, vendors, suppliers, and professionals in the ordinary course of business and to maintain its technology platform.
“The SEC suggests that it is a foregone conclusion that cryptocurrency is a security, but that is not the case. That numerous cryptocurrency exchanges, including BAM, have operated in the United States for years without interference by the SEC belies the claim that they are clearly covered by the securities laws.”
Binance.US further said the SEC’s motion is “riddled with mistakes” and omissions to inappropriately deem that BAM customer assets are “not secure.”
Cooperation With SEC
Binance.US claimed that it had made significant efforts over more than three years to cooperate with the SEC’s investigation. BAM Trading was first served with a subpoena on December 17, 2020, that resulted in over two years of document production as well as a series of follow-up requests.
This included additional subpoenas issued on five occasions between September 2021 and October 2022 and a set of twenty-eight written interrogatories on December 28, 2022.
According to the filing, Binance furnished a bevy of informal written and oral requests for the investigation. During the period, the company produced more than 700,000 individual communications, including nearly 11,391 emails, 8,196 email attachments, and 652,817 other messages.
The crypto exchange’s complaint about fully cooperating with the SEC echoed similar issues faced by its rivals that draw attention to the regulatory agency’s failure to provide clarity. Last week, Robinhood’s chief legal officer Dan Gallagher also said the popular trading firm tried to register with the agency as a special-purpose broker for digital assets and even went through a 16-month process but “did not see any fruits of that effort.”
Paul Grewal, chief legal officer of Coinbase, also expressed his frustration over the matter. The exec said Coinbase failed to secure a registration despite months of discussions and blamed SEC’s lack of response or any counter-proposal.
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