A federal magistrate judge in New York has denied the Securities and Exchange Commission’s request for immediate access to Binance US’s software, asking the regulator to provide more specific requests for discovery.
The decision was made during a hearing held on September 18, 2023, to discuss the SEC’s motion to compel Binance to hand over detailed information and make its executives more available for depositions. The SEC has been investigating Binance US since June 2023 on allegations that it offered unregistered securities and violated securities laws.
In its request for immediate access to Binance US’s software, the SEC argued that it was necessary to obtain a complete understanding of the exchange’s operations and to identify any potential violations of law. However, Binance US opposed the request, arguing that it was overly burdensome and could compromise the security of its customers’ assets.
In his ruling, Judge Zia Faruqui sided with Binance US, stating that he was “not inclined to allow the inspection at this time.” He noted that the SEC had not yet provided a sufficiently specific explanation of why it needed immediate access to the software, and that Binance US had already provided a significant amount of information to the regulator.
Judge Faruqui also encouraged the two parties to collaborate on discovery requests and to avoid unnecessary litigation. He set a hearing for October 2023 to discuss the SEC’s discovery requests in more detail.
The SEC’s request for immediate access to Binance US’s software was seen as a significant escalation in its investigation of the exchange. The decision by Judge Faruqui to deny the request is a setback for the SEC, but it is not necessarily a victory for Binance US. The SEC is still likely to pursue its investigation, and Binance US will need to continue to cooperate with the regulator.
The outcome of this case could have a major impact on the cryptocurrency industry in the United States. If the SEC is successful in its investigation, it could lead to Binance US being fined or even shut down. This could have a ripple effect on the entire cryptocurrency industry in the United States, as Binance US is one of the largest cryptocurrency exchanges in the country.
