• The SEC’s move to file a sealed motion has raised questions about transparency and the purpose of this action.
• Experts speculate on the reasons behind this rare move, with suggestions ranging from concerns about hindering a Department of Justice investigation to safeguarding witnesses or companies.

Latest developments suggest that the U.S. Securities and Exchange Commission (SEC) has submitted a new secret court filing relating to crypto exchange Binance. As we know, the U.S. SEC has already accused Binance of violating securities laws earlier this year in June. Since then, binance.US has ceased all operations in the country.

Earlier this week on Monday, within the court records for its legal proceedings against Binance, the Securities and Exchange Commission (SEC) filed a motion under seal. This mechanism allows the SEC to present sensitive or confidential material without publicly disclosing the contents. The motion also encompassed over 35 exhibits, a statement from Jennifer Farer (an SEC trial attorney), and a suggested order.

The sealed status of the motion permits the entry of confidential information into the case. However, due to its nature, this information shall remain hidden from the public.

Submitting legal documents under seal is an “uncommon step,” noted John Reed Stark, a former SEC official now associated with a consulting firm, on the X platform (formerly Twitter). He emphasized that transparency is essential for the public to comprehend the SEC’s utilization of U.S. tax funds, and the SEC strives to effectively communicate its messages to discourage future breaches of securities laws.

Stark presented two hypotheses regarding the SEC’s actions: Either it aims to prevent hindrance to a criminal inquiry at the U.S. Department of Justice, or the SEC has concerns about jeopardizing the safety of a witness or a company.

SEC vs Binance

As said, the SEC filed a lawsuit against Binance in June, claiming that the company breached federal securities regulations by providing unregistered securities to the public through its BNB token and Binance USD (BUSD) stablecoin. Stark wrote:

“Under any circumstance, that this SEC seal-seeking filing is unusual, odd and uncommon cannot be overstated. In my almost 20 years in the SEC Enforcement Division, including 11 years as Chief of the SEC’s Office of Internet Enforcement, our team worked on and led a broad range of SEC investigations which involved parallel U.S. DOJ investigations and lots of litigation – and I can’t recall ever seeking to file a motion or any other court document under seal.”

This action follows BinanceUS submitting a request for a protective order, asserting that the SEC is surpassing the established consent order’s scope. The request also urges the court to prevent depositions of BinanceUS’ CEO and CFO and disputes the SEC’s unrelated demands.

In the meantime, Judge Amy Berman Jackson has directed Magistrate Judge Faruqui to facilitate mediation between BinanceUS and the SEC in resolving their disagreement.