The U.S. Securities and Exchange Commission (SEC) is seeking the court’s approval to submit confidential documents related to the regulator’s lawsuit against the crypto exchange Binance.
On Monday, the SEC filed a sealed motion for leave to file documents under seal.
If granted, the agency will be allowed to file sensitive or confidential information with the court that will be kept off the public record.
John Reed Stark, former chief of the SEC’s Office of Internet Enforcement, says filing court documents under seal is a rare move by the SEC because the securities regulator is a civil enforcement agency.
“Thus, in stark contrast to criminal prosecutorial filings, SEC motions (and enforcement actions) are typically filed openly and free for everyone to read.”
He says the extraordinary court filing may have something to do with Binance’s alleged involvement in money laundering or other criminal activities. The U.S. Department of Justice (DOJ) is reportedly investigating the exchange.
Stark says submitting documents under seal will prevent the SEC from disrupting the Justice Department’s criminal investigation or placing a witness at risk.
“My take is that the secret U.S. SEC filing likely relates to an existing U.S. DOJ investigation of Binance and could, directly or indirectly, describe the heretofore unknown contents of an impending U.S. DOJ Binance-related indictment or an indictment already filed under seal — which the U.S. DOJ would prefer to keep secret.”
Stark guesses that Binance isn’t likely to oppose the sealing motion to protect incriminating evidence or potentially damaging criminal allegations against the exchange from being made public.
The former SEC official does acknowledge, however, that the situation is difficult to predict.
“If Binance does oppose the U.S. SEC seal request, then the U.S. SEC motion more likely relates to the U.S. SEC’s desire to keep the identity of a witness secret, and Binance would prefer that the world know the names of any of Binance’s accusers.”
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