In a significant development, the United States Securities and Exchange Commission (SEC) faced a setback when a federal magistrate judge denied its request to inspect Binance US as part of an ongoing investigation. This decision comes in the wake of a substantial decline in trading volume on the platform since the initiation of the lawsuit.
The SEC had filed the request on September 18, alleging that Binance US was uncooperative in the investigation, failing to provide the requested information. The regulatory body expressed dissatisfaction, asserting that Binance US had thus far only submitted 220 documents, many of which consisted of “unintelligible screenshots and documents without dates or signatures.”
The SEC’s motion on Monday was intended to grant immediate access to Binance US’ software and compel the exchange to produce additional documents and witnesses for the investigation. However, Federal Magistrate Judge Zia Faruqui declined the request, stating, “[I’m not] inclined to allow the inspection at this time,” according to a Bloomberg report.
Instead, the magistrate judge recommended that the SEC submit more concise discovery requests to Binance US and engage with additional witnesses. The SEC had initially requested access to four witnesses, while contending that the additional personnel it sought were not sufficiently knowledgeable about the subject matter.
Furthermore, the SEC, in its latest allegations against Binance US, claimed that the exchange had provided misleading information to the court regarding its relationship with Ceffu, formerly known as Binance Custody. The SEC argued that Ceffu is indeed a Binance-related entity, contrary to the exchange’s previous assertions in court documents.
Amidst this ongoing legal dispute, Binance US has faced business challenges. Several key executives have departed from the company in recent weeks, and trading volume on the platform has seen a significant decline. Data from Kaiko Research reveals that weekly trading volume on Binance US has plummeted from nearly $5 billion earlier this year to a mere $40 million.
The next hearing in the legal battle between Binance and the SEC is scheduled for October 12. In the interim, both parties are expected to adhere to the latest court guidance as they navigate this high-stakes dispute.