The SEC has faced a setback after a federal magistrate rejected its request for immediate access to Binance.US software.
The US Securities and Exchange Commission (SEC) has faced a setback in its pursuit of Binance.US, the American sister company of crypto exchange Binance.
On September 18, a federal magistrate judge denied the SEC’s request to gain immediate access to Binance.US’s software.
In the hearing, US District Judge Zia Faruqui said that he wasn’t “inclined to allow the inspection [of the software] at this time”, proposing that the SEC should make more specific requests instead.
The judge also recommended that the Commission speaks with a broader range of witnesses. The SEC has said that Binance has been uncooperative in the ongoing case, which accuses the exchange of selling unregistered securities, among other changes.
The regulator said Binance.US’s holding company, BAM, has submitted 220 documents during the discovery process, but most of the documents under the consent order are “unintelligible screenshots and documents without dates or signatures.”
The filing also states, “BAM has responded to requests for relevant communications with blanket objections and has refused to produce documents kept in the ordinary course of its business, claiming those documents do not exist, only for the SEC to later receive such documents from other sources.”
The SEC has turned its eyes toward, Ceffu, Binance’s custody partner
The SEC requested a closer look at Binance.US’s software after alledging that the exchange has misled the court in relation to its relationship with Ceffu, its custody partner.
The Commission alleges that Ceffu is more than just a wallet provider, and the company was employed to transfer US customer funds out of the country, violating a prior agreement between Binance.US and the SEC.
The court’s denial of immediate inspection marks a notable roadblock in the SEC’s course of legal action, but the case has still put Binance.US under heavy strain.
Last week, the exchange announced it will lay off one-third of its staff after Brian Shroder, CEO of Binance.US, left the company.
An upcoming hearing focusing on the protective orders is scheduled for September 18.
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