- The SEC’s attempt to inspect Binance.US software was denied.
- The judge stated that the SEC should come up with more tailored requests.
- The ongoing legal case has taken a toll on Binance.US, resulting in a significant reduction in trading volume.
The legal case between the US Securities and Exchange Commission (SEC) and crypto exchange Binance took an unexpected turn as the SEC failed to convince a judge to let officials inspect Binance.US’s software.
According to reports, the SEC has been struggling to get information about Binance.US since it sued the company. The SEC filed a lawsuit in June 2023 against Binance.US, Binance Holdings, and Binance CEO Changpeng Zhao. Recently, the regulator asked a federal magistrate judge to allow an inspection of Binance.US’s software and technological infrastructure.
However, Judge Zia Faruqui denied the request and stated that he wasn’t “inclined to allow the inspection at this time.” The judge believed that the SEC should come up with more “tailored requests” and speak with additional witnesses.
The SEC alleged that Binance.US, which is billed as a separate entity from Binance, intended to serve American clients but wasn’t separate and didn’t follow American regulations. The SEC shared that inspecting Binance.US’s software could show possible links to Binance.
Binance.US’s lawyers described the SEC’s request as a “fishing expedition” and “overboard,” according to Bloomberg. Matthew Martens, one of Binance’s US lawyers, said the company has responded to all of the SEC’s “targeted requests.” He added, “What we are not going to respond to is the foolishness of document requests that came from the government here.”
The case between Binance and the SEC is affecting trading volume on Binance.US, according to data. Binance.US lost its banking support, suspended US dollar deposits, and laid off a third of its workforce.
Data shows that between January 2022 and August 2023, Binance’s US trading volume decreased by 98%. The crypto exchange’s volume is expected to fall further in September after reaching a high of $286 million in August.
According to data tracker CoinGecko, Binance.US had about $11.2 million in daily trading volume at press time. In contrast, the daily trading volume on Coinbase (NASDAQ:COIN), another cryptocurrency exchange, was $983 million.
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