Binance motion alleging SEC misconduct denied

• A US judge has said the court cannot wordsmith the SEC and Binance’s press releases.
• But in denying the crypto exchange’s motion, Judge Amy Berman Jackson said either party has to “adhere to their ethical obligations at all times.”
• SEC sued Binance in early June and published a press release alleging commingling of user funds.

Judge Amy Berman Jackson on Monday June 26 denied a motion filed by crypto exchange Binance that sought to stop the SEC from making public statements on the SEC/Binance case.

Binance had alleged that the SEC had published misleading statements that could impact the case and taint the jury pool.

Three days on from the filing, the court pronounced itself on the motion, with Judge Jackson noting that the court cannot “wordsmith” either party’s press releases. Her order read:

“While all of the lawyers in this case should adhere to their ethical obligations at all times, it is not apparent that Court intervention to reiterate that point is needed at this time, or that it is necessary or appropriate for the Court to get involved in wordsmithing the parties’ press releases. Nor is it clear that the agency’s public relations efforts to date will materially affect proceedings in this case.”

Binance questioned SEC’s statements

Binance’s motion followed SEC’s press release on June 21 in which the securities regulator had reiterated its allegations of commingling of user funds by the exchange’s leadership.

The statements came after the two parties reached an agreement on the handling of assets of Binance.US. The agency had filed for a freeze on the exchange’s assets suggesting the need to protect US customers.

In its response to the SEC’s press release, Binance said the regulator had published misleading facts about Binance and CEO Changpeng Zhao mishandling Binance.US customer funds. 

The motion sought orders against the regulator – specifically the motion wanted Judge Jackson to order counsel to comply with ethical obligations and not to make “misleading extrajudicial statements that may materially impact court proceedings.”

“Not a great result for Binance”

John Reed Stark, Former Chief, SEC office of Internet Enforcement, commented on the court’s decision, suggesting that Binance’s filing may not have been worth it.

“It seemed so frivolous on its face and more akin to marketing theater than legal argument,” he noted.

James “MetaLawMan” Murphy, a securities lawyer, said the judge’s order isn’t a great one for Binance – even if it doesn’t impact the merits of its case.

Judge Jackson has issued a brief order denying the @Binance motion before the SEC filed its response.The judge wrote that it was not necessary to reiterate both side’s obligations to comply with ethics rules, and she will not get involved in “wordsmithing the parties’ press…

— MetaLawMan (@MetaLawMan) June 26, 2023

Separately, the court set forth a timeline for the early proceedings. Binance will plead its case on September 21, 2023 before the plaintiff presents their legal arguments on 7 November 7, 2023. The court will listen to replies starting December 12.