According to a January 25 joint status report, the SEC alleged that Binance.US's parent company, BAM Trading Services, failed to adequately respond to information requests. The regulator is seeking detailed information that Binance.US may have hidden control mechanisms over customer funds, raising concerns reminiscent of the FTX scandal.
BAM's lawyers flatly denied these allegations, stating that the company complied with all requirements under the consent order, including the production of documents and requests for expedited remediation. The lawyers argue that the SEC's methods place an unfair burden on BAM through its Temporary Restraining Order (TRO) and expedited discovery requests.
The consent order initially agreed to in the SEC's investigation is at the center of the dispute. BAM claims that the SEC has expanded the investigation beyond the security and accounting of customer assets and is now broadly scrutinizing BAM's safeguarding policies and practices.
The regulator is reportedly seeking evidence related to its concerns that Binance.US may have backdoors that could provide additional control over customer assets. BAM lawyers claim that they fully complied with document production requirements.
SEC Demands Testimony from Former Executives of Binance.US in Case
The report stated that testimony was requested from Brian Shroder, former CEO of BAM Trading Services, and Jasmine Lee, former CFO.
BAM Trading Services, the parent company of Binance.US, argues that additional testimony from current or former employees is not needed. The company notes that the SEC deposed a large number of witnesses during the expedited discovery phase, so the regulator has gathered all the necessary information.
BAM lawyers say that the SEC's motion does not provide any evidence of the details of Shroder and Lee's day-to-day operations at Binance.US.
BAM's CEO and CFO do not have unique knowledge of the matters identified in the consent order's expedited discovery provision, the lawyers said. They also emphasize that other witnesses with more information about BAM's operations have been presented.
