U.S. Judge Urges Cooperation Between Binance.US and SEC For Discovery Dispute

Magistrate Judge Zia Faruqui presided over a hearing on Monday about the ongoing conflict between Binance.US and the U.S. Securities and Exchange Commission (SEC), which is a recent event in the legal world. The SEC’s requests for further documents and executive depositions from Binance.US dominated the session. Judge Faruqui urged the two parties to work together to settle their disagreements on the discovery requests rather than issuing specific directives.

Seeking Common Ground

Judge Faruqui urged Binance.US and the SEC to reach an understanding on the issue of discovery at the hearing. In order to assess the security of Binance.US‘s funds, he suggested the SEC to focus its broad request for information while allowing the deposition of certain stockholders. The judge stressed the need of Binance.US giving additional information regarding its connection with Ceffu, its service provider, as part of his recommendations.

“At this time, I won’t issue a bench order directing them to create or not do anything. Let’s keep trying to resolve this, Judge Faruqui said. “All I want to do is keep things going,”

SEC’s Concerns and Binance’s Defense

The SEC’s main defense is on its worry that Ceffu is more closely linked to Binance Holdings Limited than was specified in an earlier ruling. This directive said that Binance.US and its parent firm BAM Trading were to retain all monies belonging to U.S. customers in wallets that could only be accessed by U.S. workers.

Matthew Martens, an attorney representing Binance.US, argued that the SEC’s document requests were overly broad and challenging to fulfill. He stated, “Chasing down exactly how that software works is neither here nor there.” Additionally, the judge expressed the need for Binance to provide more information about its current custody solution, expressing some reservations about BAM’s control over their assets.

SEC attorney Jennifer Farer defended the regulator’s request for extensive information, citing the necessity of understanding Binance.US’s new wallet arrangement. In response, Martens criticized the SEC’s approach as “not serious litigation.”

Ongoing Legal Battle

When the SEC filed a lawsuit against Binance and its founder, Changpeng “CZ” Zhao, in June, it was on the grounds that Binance was running an unregulated securities exchange. Since that time, the SEC has been aggressively pushing to make sure that funds from American clients stay in the country.

A follow-up hearing was planned for October 12 and a deadline for a joint status report was established for October 10. The verdict in this case will probably have a big impact on how cryptocurrency exchanges are governed and how securities rules are applied in the US.

Judge Zia Faruqui urges collaboration between Binance.US and the SEC to settle their disputes about document demands and depositions in the middle of a legal deadlock. The regulation of cryptocurrencies in the US may be impacted by this current argument.