The SEC is currently facing a setback as a federal judge has rejected its appeal to gain access to the software that powers Binance.US, the American branch of the exchange.
During a court hearing held on Monday, the regulator had requested a federal magistrate judge to authorize an inspection of Binance.US’s technical infrastructure and compel the company to disclose other relevant information as part of its ongoing legal proceedings against the exchange.
SEC Hit a Roadblock in its Witch Hunt Against Binance.US
Judge Faruqui expressed his reluctance to permit the inspection at the present moment. Instead, he suggested that the Securities and Exchange Commission should formulate more precise requests for discovery and engage with a wider range of witnesses, according to a news report by Bloomberg.
The legal battle, which began back in June, represents the most recent development in the ongoing litigation. The Securities and Exchange Commission filed a lawsuit against Binance.US, Binance Holdings, and Binance CEO Changpeng ‘CZ’ Zhao for operating an unlicensed crypto exchange.
According to the SEC, the distinction between Binance.US and Binance Holdings is superficial, and it alleges that clients’ funds were being transferred out of the United States in contravention of securities regulations.
The Securities and Exchange Commission has consistently asserted that it has encountered difficulties in obtaining information from Binance.US, as well as its global affiliate, Binance Holdings Ltd.
The regulator is focusing on Ceffu, a custody platform that was rebranded earlier this year from Binance Custody. The SEC believes that Ceffu has been serving as a bridge between Binance.US and Binance Holdings, enabling the transfer of US customer funds outside the country.
The SEC requested an inspection of Binance’s software to ascertain the extent of Ceffu’s involvement in facilitating the alleged illicit transfer. Although Judge Faruqui has denied the request, it is unlikely to dissuade the SEC from pursuing its investigation.
