Binance files for a protective court order against SEC

The backstory: As we’ve reported before, the SEC, the US Securities and Exchange Commission, has been trying to regulate cryptocurrency. It's been quite the stir in the world of digital money. The SEC thinks that crypto should be held to the same standards as securities like stocks and bonds. But many crypto companies don't agree and argue that their products are different and should be governed by new regulations tailored to the crypto space. This disagreement has led to many crypto companies not registering with the SEC, which is a must if you're dealing in securities.

SEC chief Gary Gensler has even called the whole crypto scene the "Wild West." So, the SEC has been cracking down on these crypto companies to make sure they fall in line with the rules, taking legal action against several companies. One of the big names on its hit list is Binance, the biggest crypto exchange out there.

More recently: In June, the SEC took Binance and its CEO, Changpeng Zhao (CZ), to court, accusing them of a tangled "web of deception." According to the SEC, Binance encouraged US customers to trade on its unregulated international platform, mingled investor funds with its own reserves and essentially broke securities laws. The SEC also argued that the exchange intentionally used its US-based arm to shield its activities and get around regulations by helping big US customers avoid the rules and continue trading on the unregulated exchange.

The development: Binance has filed for a protective court order against the SEC. It says that the SEC's been demanding too much info, and it's becoming a headache. Binance's US team, BAM Trading and BAM Management are backing it up on this. In a court filing in the US District Court of Columbia, they said they’ve already handed over enough information to the SEC.

But what's at the core of Binance's request? It wants the SEC to narrow down its line of questioning. Specifically, Binance wants only four of its BAM employees subject to questioning. And not just that, it’s trying to keep depositions by the CEO and CFO of BAM out of the process because Binance says there's no concrete evidence backing up the SEC's claims.

Key comments:

"The SEC has still yet to identify any evidence suggesting that customer assets were misused or dissipated in any way," said the filing from Binance.

"We allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law," said SEC Chair Gary Gensler in a statement in June.

"Given that Changpeng Zhao and Binance have control of the platforms' customers' assets and have been able to commingle customer assets or divert customer assets as they please ... these prohibitions are essential to protecting investor assets," said Gurbir Grewal, director of the SEC's enforcement division, in a statement.

“Though every case is different, in most large financial investigations and civil enforcement actions, the SEC’s request for documents, testimony, depositions, interrogatories, etc. typically ask for a bit too much information,” said former SEC Internet Enforcement Chief John Reed Stark. “Along the same lines, the defendant typically asks for a bit too much by way of a protective order.”