The US Securities and Exchange Commission (SEC) has made a secret legal move against crypto exchange Binance. Late on August 28, the SEC filed a sealed motion in the District Court of the District of Columbia, shielding the document’s contents from public view.
This confidential filing adds a new layer of complexity to the ongoing litigation between the securities agency and Binance Holdings.
SEC’s sealed motion accompanied 37 additional submissions, including various exhibits. John Reed Stark from John Reed Stark Consulting LLC noted in a tweet that the filing included several proposed orders. It also has a statement from Jennifer Farer, a trial attorney with the SEC.
Interestingly, the filing adds a new facet to the case, as the details of these submissions remain confidential. In June, the agency sued Binance over multiple securities law violations. 13 charges were leveled against the crypto giant with allegations against Binance Holdings Ltd., its US affiliate BAM Trading Services Inc., and founder Changpeng Zhao.
Stark believes it is a ‘rare tactic’ used by the US SEC, considering it operates with high transparency. According to the executive, the commission’s civil enforcement actions are generally public and openly accessible.
“After all, it’s in the public interest to know and understand the SEC’s use of US tax dollars and the US SEC wants its messages heard loud and clear to deter future securities violations.”
Why Did the Watchdog Make a Secret Filing?
Stark outlines two probable reasons for this veiled approach by the SEC. First, it could be aiming to protect the integrity of a concurrent criminal investigation by the US Department of Justice (DOJ). He notes that if the DOJ is probing Binance, it might be using secret grand jury proceedings or employing undercover operations.
Secondly, the SEC could be attempting to safeguard a witness or a company.
In Stark’s view, this filing may also pertain to undisclosed money laundering allegations against Binance or other potential criminal conduct. Stark also speculates that Binance will unlikely challenge the SEC’s sealed motion.
“If Binance does oppose the US SEC seal request, then the US SEC motion more likely relates to the US SEC’s desire to keep the identity of a witness secret, and Binance would prefer that the world know the names of any of Binance’s accusers.”
While the motive behind the SEC’s filing is currently unclear, an elaborate legal drama can unfold between the SEC and Binance. In the past, Binance reached a mutual agreement with the SEC to avoid a fund freeze.
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