BAM Trading, the operating company of Binance U.S., along with BAM Management, has recently taken a stand against the U.S. Securities and Exchange Commission (SEC), accusing them of abusing their information requests. In a court filing on August 14th, the company sought a protective order, describing the SEC’s actions as “troubling and inappropriate.” This article critically analyzes the situation and sheds light on the ongoing legal battle between BAM Trading and the SEC.
According to BAM Trading, the SEC is demanding the production of “all communications” dating back to November 2022 from at least six employees and executives of the company. However, the scope of these requests encompasses numerous topics that have no relevance to customer assets. Additionally, the SEC aims to depose six individuals, including the CEO and CFO of BAM Trading. This overreach by the SEC raises concerns about their true motive behind these requests.
BAM Trading referred to the SEC’s actions as a “fishing expedition,” implying that the regulator is engaging in an unfocused and invasive investigation. The company claims to have cooperated in good faith by fulfilling some of the SEC’s demands. However, it argues that these requests are overly broad and unreasonable, highlighting that courts do not tolerate such fishing expeditions and the excessive expenses involved in these unfocused investigations.
Furthermore, BAM Trading asserts that the SEC’s approach lacks evidence of any misuse or mishandling of customer assets. It argues that the regulator’s case seems to have little to do with the company’s asset custody practices. Despite BAM Trading’s attempts to limit the SEC’s discovery demands, the regulator appears adamant, believing that the Consent Order gives it unlimited investigative powers without any discernible limitations. This approach by the SEC raises concerns about their intentions and procedural fairness.
To counter the invasive actions of the SEC, BAM Trading has requested a protective order. This order should restrict the SEC’s ability to gather information solely related to the ongoing case, limiting the number of depositions involving BAM staff to only four. Additionally, BAM Trading proposes excluding its CEO and CFO from the depositions. The crypto firm believes that a protective order will help maintain a fair balance of power between the SEC and BAM Trading and prevent any further abuse of authority.
The SEC’s lawyers, however, have opposed BAM Trading’s motion for a protective order. This opposition further escalates the conflict between the two parties and prolongs the legal battle. The SEC’s refusal to consider the limitations proposed by BAM Trading raises concerns about the regulator’s intentions and willingness to engage in a fair and focused investigation.
This legal tussle between BAM Trading and the SEC has significant consequences for Binance US. The lawsuit filed in June by the SEC against Binance and BAM Trading, alleging violations of federal securities law, has disrupted the operations of Binance US. The ongoing legal battle adds uncertainty to the future of the exchange and its ability to operate smoothly within the regulatory framework.
The case between BAM Trading and the SEC exposes the challenges and power dynamics involved in regulatory investigations. BAM Trading’s accusations of abuse and overreach by the SEC warrant serious consideration. It is crucial that a fair and focused investigation takes place to ensure the protection of customer assets and the integrity of the regulatory process. The outcome of this legal battle will have far-reaching implications not only for BAM Trading and Binance US but also for the broader crypto industry as a whole.
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