Judge Zia M. Faruqui, a magistrate judge with the U.S. District Court for the District of Columbia, has denied the U.S. Securities and Exchange Commission's (SEC) request to inspect Binance.US. Faruqui's decision is the latest development in the legal battle the SEC initiated in June.
During a court hearing on Sept. 18, Faruqui denied the SEC's request to conduct an immediate inspection of Binance.US's software and other documents, Investing.com reported. BAM Trading, Binance.US's holding company, had produced 220 documents during the discovery process, leading the SEC to accuse Binance.US of not cooperating with the investigation. The SEC described some of the documents as "unintelligible screenshots and documents without dates or signatures." Faruqui asked Binance.US to provide additional documents.
In June, Judge Amy Berman Jackson denied the SEC's request for an emergency temporary restraining order (TRO), which the SEC would have used to freeze Binance.US's assets, the New York Times reported. Jackson instead directed the SEC and Binance to reach a compromise that would allow the exchange to continue its operations while the civil litigation is ongoing. The judge described the SEC's reliance on litigation in the crypto industry as "inefficient and cumbersome."
On June 5, the SEC announced its lawsuit against Binance, Binance.US and BAM Trading, alleging "a variety of securities law violations," according to a press release from the SEC.
Binance responded to the SEC's lawsuit with a blog post saying it was "disappointed" in the regulator's decision to pursue litigation and highlighting the absence of regulatory clarity for crypto exchanges in the U.S.
"From the start, we have actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns," the blog post said. "Unfortunately, the SEC’s refusal to productively engage with us is just another example of the Commission’s misguided and conscious refusal to provide much-needed clarity and guidance to the digital asset industry."