On August 29th, the U.S. Securities and Exchange Commission (SEC) submitted a sealed recommendation to the court in the lawsuit against the cryptocurrency exchange Binance. The notable aspect here is that this sealed recommendation allows the SEC to provide sensitive or confidential information without publicly disclosing its contents. However, according to sources from the court, the sealed recommendation consists of 36 attached documents, including a proposal and statements from SEC attorneys like Jennifer Farer and Matthew Scarlato. However, the precise details of the content are not disclosed.
The SEC’s move has drawn the attention of John Reed Stark, a former official of the Securities and Exchange Commission who currently works in the advisory field. He shared his viewpoint, stating that the submission of private and confidential documents to the court is a rare action, which could impact the lawsuit between the SEC and Binance. However, Stark also emphasized that, despite short-term effects, the SEC has used taxpayer funding to ensure the public interest and prevent securities violations in the future.
Stark also put forth two hypotheses regarding the SEC’s goals through this sealed document submission. One is that they might be trying to avoid interference in the criminal investigation by the U.S. Department of Justice (DOJ), as the DOJ previously filed charges and reviewed allegations of fraud against Binance. The second is that the SEC might be concerned about exposing witnesses and companies to risks.
Regarding Binance, Stark made two predictions. One is that if Binance does not oppose the SEC’s sealed recommendation, the documents might contain incriminating information that Binance does not want to disclose. The other is that if Binance opposes this SEC recommendation, it might be related to testimony from witnesses that Binance wants to make public.
It’s evident that in recent times, the SEC is facing numerous challenges and pressures as cryptocurrency companies (such as Ripple, Grayscale) continue to win legal battles. Consequently, they are focusing more on ensuring compliance and preparing carefully for counterattacks. Recently, they have been zealous in imposing penalties on an NFT-issuing company for alleged unregistered securities provision.
Recalling that in June, the SEC filed a lawsuit against Binance for providing unregistered securities to the public in the form of the BNB token and Binance USD (BUSD) stablecoin.