Recently, the U.S. Securities and Exchange Commission (SEC) notified Binance and its affiliated entities of its intention to seek permission to revise its complaint in a high-profile legal case. The SEC’s request to amend the complaint addresses “Third Party Crypto Asset Securities,” a category previously detailed in its motion to dismiss.
This amendment aims to streamline the legal process, potentially eliminating the need for the court to assess the current sufficiency of the allegations concerning these tokens. The SEC and defendants Binance, BAM Trading Services, BAM Management U.S. Holdings Inc., and Changpeng Zhao submitted a joint response to a court order from July 9, 2024, which outlined their respective positions on the case.
Binance and SEC’s Joint Response
The SEC’s proposal includes a detailed timeline for filing and responding to the motion to amend. According to this plan, the SEC will file its motion to amend within 30 days of the court’s scheduling order. Defendants will have 30 days to respond, and the SEC will provide a reply 21 days later.
Subsequent steps include deadlines for the defendants’ answers or Rule 12 motions and responses to those motions. A key point of contention is the commencement of discovery. The SEC proposes that discovery should proceed on the claims that have already survived the defendant’s motion to dismiss, based on a prior court order from June 28, 2024.
The SEC argues that it is not unreasonable to start discovery on these claims immediately, even if the complaint is later amended. This approach would allow the case to progress without waiting for additional motions and potential revisions.
Binance Disputes Early Discovery with SEC
However, the defendants disagree. They argue that beginning discovery without seeing the SEC’s proposed amendments is premature. The defendants emphasize that the SEC’s last-minute changes to the proposed joint status report, which included a suggestion to start discovery without disclosing the amended complaint, were unacceptable.
They argue that discovery plans should not be discussed prior to the time when the SEC files and they review the amendment. However, scheduling for the filing of motions and responses has been agreed upon by both parties. They further agree to meet and confer it by procedural rules to finalize a discovery plan once the court resolves the SEC’s motion to amend and any consequent motions.
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