The US Securities and Exchange Commission (SEC) is seeking court approval to file confidential documents related to the regulator’s lawsuit against crypto exchange Binance.
On Monday, the SEC filed a sealed motion for permission to file documents under seal.
If allowed, the agency may submit sensitive or confidential information to the court, which will be kept out of public record.
John Reed Stark, former chief of the SEC’s Office of Internet Enforcement, say submit court documents under seal is a rare move by the SEC, as the securities regulator is a civilian enforcement agency.
“So, in stark contrast to criminal prosecution filings, SEC motions (and enforcement actions) are typically filed openly and free for anyone to read.”
He says the extraordinary lawsuit may have something to do with Binance’s alleged involvement in money laundering or other criminal activities. The United States Department of Justice (DOJ) is reportedly investigating the exchange.
Stark says sealing documents will prevent the SEC from interfering with the Justice Department’s criminal investigation or endangering a witness.
“My view is that the classified US SEC filing likely relates to an existing US DOJ investigation into Binance and could, directly or indirectly, describe the as-yet-unknown content of a threatened US DOJ Binance-related indictment or an indictment which has already been filed under seal – which the US DOJ would prefer to keep secret.”
Stark suspects that Binance is unlikely to oppose the sealing move to protect incriminating evidence or potentially damaging criminal charges against the exchange from disclosure.
However, the former SEC official acknowledges that the situation is difficult to predict.
“If Binance opposes the US SEC’s seal request, the US SEC’s motion is more likely related to the US SEC’s desire to keep the identity of a witness confidential, and Binance would prefer that the world knows the names of Binance’s accusers.”
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