Binance is under pressure in the U.S. from regulators CFTC and SEC and has reportedly refused to enter into an out-of-court settlement with the SEC. Binance‘s legal clash with the SEC has taken a fresh twist, with the exchange seeking a protective order to curtail the regulator’s extensive deposition requests. Former SEC Chief John Reed Stark has offered insights into the potential implications of the protective order motion.
The U.S. arm of Binance filed a protective order against the SEC for its excessive encroachment in its bid to gather evidence in its charges against the firm. In a new twist, Judge Amy Berman Jackson referred the case to a magistrate court, which will be presided over by Judge Faruqui. The referral to a lower court is an attempt by Judge Jackson not to derail from the crux of the matter at hand.
The ongoing legal battle between Binance and the SEC is marked by a clash of positions concerning the discovery phase of the lawsuit. Binance has maintained that it has provided substantial evidence to demonstrate the safety of its customers’ assets. Conversely, the SEC, under the leadership of Gary Gensler, has persisted in demanding extensive new discoveries that Binance considers onerous.
To break this impasse, John Reed Stark suggests that Presiding Judge Jackson is likely to pursue a path of compromise. If this route proves challenging, the judge might consider referring the case to an experienced and trusted D.C. magistrate judge, possibly establishing specific deadlines and hearing dates to maintain the legal process. In the event that the latter option is adopted, Judge Jackson would probably assign the magistrate judge during a hearing or through a docket entry accompanied by a Minute Order, according to the former SEC executive.
To me, this all boils down to a comprehensive, complex and multi-faceted discovery dispute, which happens to fall under the unusual judicial oversight of an onerous and exigently obtained Consent Order (i.e. Temporary Restraining Order (TRO) Agreement) signed by D.C. District Court Judge Amy Berman Jackson, who is presiding over the SEC’s case against Binance.US.
John Reed Stark on X (link)
This legal dispute between Binance and the SEC, while differing in specific details from other lawsuits involving the regulator and various defendants, remains one of the highly observed conflicts within the current landscape of the crypto ecosystem. Binance faces a range of accusations, primarily centered around its alleged support for trading unregistered crypto securities. Unlike some counterparts that have chosen the route of settlement, such as Bittrex, Binance has opted to engage in a prolonged legal battle with the SEC, determined to secure a favorable outcome. Drawing upon the positive precedent the XRP ruling sets, Binance appears poised to leverage this favorable precedent in its fight against the SEC.