Binance, SEC Near Compromise? Protective Order Sent to Magistrate

Judge Amy Berman Jackson has referred Binance’s protective order to a magistrate court.

Changpeng Zhao creating a safety bubble from Gary Gensler.
Created by Kornelija Poderskytė from DailyCoin
  • Judge Amy Berman Jackson has referred Binance’s protective order to a magistrate court.
  • The move seeks a compromise to the latest fact-finding dispute to arise in the case.
  • The SEC has raised significant concerns about the safety of Binance customer deposits.

The SEC case against Binance, Binance.US (its U.S. affiliate), and Binance founder Changpeng “CZ” Zhao has taken a new turn. 

The judge in the closely watched legal battle has pushed a fact-finding tussle to a magistrate judge for resolution. Can both parties reach a compromise with Binance’s future in the U.S. continuing to hang in the balance?

Binance and the SEC Referred to Magistrate Judge

On Monday, August 14, Binance.US asked the court for a protective order against the SEC, arguing that the regulator was turning a “limited expedited discovery” granted as part of the consent order agreement into a “fishing expedition.”

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The SEC had allegedly requested all communications from six employees, including Binance.US CEO Brian Shroder and CFO Jasmine Lee dating back to November 2022. At the same time, the regulator had allegedly also asked that these employees be made available for deposition. The crypto exchange asserted that the SEC’s requests exceeded the scope of discovery, which they contend should be limited to customer asset security.

Responding to Binance.US’ request in a court order on Wednesday, August 16, Judge Amy Berman Jackson referred the protective order to Magistrate Judge Zia M. Faruqui for resolution.

Court order referring Binance’s motion for protective order to a magistrate judge.
Court order referring Binance’s motion for a protective order to a magistrate judge. Source: CourtListener

Former SEC enforcement Chief John Reed Stark, who had predicted that the matter would be sent to a magistrate judge, explained that it was geared towards achieving a compromise. 

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According to the former SEC enforcement chief, this was standard practice as SEC discovery efforts typically requested too much information, and defendants also commonly asked too much in protective orders. Still, he maintained that given the stakes, it was likely that Binance would be forced to give in to most of the SEC’s requests.

Early in the case, the SEC had raised significant concerns over the safety of customer deposits on Binance and Binance.US, accusing the international crypto exchange and its founder Zhao of routinely commingling customer funds.

On the Flipside

  • Given that the judge’s order came before the SEC could respond, it is difficult to predict which side the resulting compromise would favor.
  • Binance has revealed its intention to seek the dismissal of the SEC case.

Why This Matters

The move by Judge Amy Berman Jackson to refer the protective order to a magistrate judge suggests that the fact-finding dispute will likely end in a compromise.

Read this to learn more about Binance’s stance on the SEC’s fact-finding efforts:
Binance.US Seeks to Prevent SEC from Deposing Top Execs

Polygon is making big splashes in South Korea. Find out more:
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This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Okoya David

David Okoya is a crypto news reporter at DailyCoin based in Nigeria. He covers various topics related to the cryptocurrency industry, including exchanges, regulations, and price movements, and strives to bring fresh angles to breaking news. With experience as a freelance crypto news writer, David upholds the highest journalistic standards, telling complete stories and answering lingering questions whenever possible.