MOTION to Unseal Document [102] SEALED MOTION FOR LEAVE TO FILE DOCUMENT UNDER SEAL filed by SECURITIES AND EXCHANGE COMMISSION (This document is SEALED and only available to authorized persons.) filed by SECURITIES AND EXCHANGE COMMISSION by SECURITIES AND EXCHANGE COMMISSION. (Attachments: # (1) Text of Proposed Order, # (2) Exhibit SEC Motion To Compel Exhibit 10 (Redacted), # (3) Exhibit SEC Motion to Compel Exhibit 14 (Redacted), # (4) Exhibit SEC Motion to Compel Exhibit 15 (Redacted), # (5) Exhibit SEC Motion to Compel Exhibit 16 (Redacted), # (6) Exhibit SEC Motion to Compel Exhibit 19 (Redacted), # (7) Exhibit SEC Motion to Compel Exhibit 21 (Redacted), # (8) Exhibit SEC Motion to Compel Exhibit 26 (Redacted), # (9) Exhibit SEC Memorandum in Support of Its Motion To Compel, # (10) Exhibit Declaration of Jennifer Farer in Support of SEC Motion to Compel)(Scarlato, Matthew). Added MOTION to Withdraw on 9/15/2023 (znmw).
Page 1 EXHIBIT 14Page 2 From:
To:
Cc:
Subject:
Date:
Murphy, J. Emmett
Martens, Matthew T.; Beville, Matthew; gcanellos@milbank.com; McLucas, William; mlaroche@milbank.com;
Adler, Jeremy
Smith, Tiffany; Scarlato, Matthew; Farer, Jennifer; Tenreiro, Jorge
RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
Wednesday, August 16, 2023 10:26:32 PM
Matt –
Please advise on date(s) for Mr. Shuster and locations for his and other scheduled depositions.
Thanks.
Emmett
From: Murphy, J. Emmett
Sent: Monday, August 14, 2023 9:27 PM
To: Martens, Matthew T. ; Beville, Matthew ; gcanellos@milbank.com; McLucas, William ; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
Matt,
We are not willing to withdraw the deposition notices of Mr. Shroder and Ms. Lee, and BAM
has not raised any specific objections to the notices of these two witnesses that would give us
a basis to do so. Despite our having had multiple communications regarding the depositions
generally, today is the first time BAM has even mentioned these two specific witnesses in the
nearly two weeks since we noticed their depositions. We also reiterate our request for dates
for Mr. Shuster. There is no basis in the Consent Order or the Federal Rules for BAM to
dictate whom the SEC may depose. For all depositions, we again ask that BAM propose
locations. We are happy to host any deposition at our DC headquarters.
As to documents, we reject your characterizations about our repeated requests for and multiple
discussions about communications, and will not spend any more time at this late stage
addressing each of them. We do note that the handful of communications that have been
produced in large part reflect a response to specific discussions on other document issues.
BAM’s position on communications is inconsistent with the Consent Order, and it appears we
will each be seeking relief from the Court on the issue.
Finally, on a separate document-related issue – we understand from counsel for FGMK that
they are withholding documents from production to the SEC based on BAM’s potential
assertion of work product protection. Please provide a log identifying each document and the
basis for such assertion by Thursday so we can evaluate and raise the issue with the Court, if
necessary.
Regards,Page 3 Emmett
From: Martens, Matthew T.
Sent: Monday, August 14, 2023 8:14 AM
To: Murphy, J. Emmett ; Beville, Matthew ; gcanellos@milbank.com; McLucas, William ; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
CAUTION: This email originated from outside of the organization. Do not click links or open
attachments unless you recognize the sender and know the content is safe.
Dear Emmett:
We propose August 24 for Mr. Kellogg’s deposition and confirm August 31 for Mr. Zhang’s
deposition.
We do not agree to depositions of Brian Shroder or Jasmine Lee nor do we understand why
you intend to take them consistent with the purpose of the Consent Order and given the other
witnesses we’ve offered to make available.
We disagree with your assertion that we “have now for the first time expressed a willingness to run
targeted email searches.” We previously produced email communications based on a targeted
request. Moreover, we have asked you on several occasions to propose more limited requests, but
you have declined to do so. Regardless, we do not think it would be useful for us to propose search
parameters. We do not understand (and you have not explained) why you need communications to
assess the custody and security of customer assets, which leaves us guessing as to what subset of
communications about customer assets would satisfy your requests.
We assume we are at an impasse on the depositions of Mr. Shroder and Ms. Lee and the production
of communications. Please let us know by 5pm today whether you withdraw your requests;
otherwise we will move for a protective order with the Court.
Finally, we agree to accept service on behalf of the individuals identified below.
Best regards,
--Matt
From: Murphy, J. Emmett Page 4 Sent: Thursday, August 10, 2023 7:43 PM
To: Martens, Matthew T. ; Beville, Matthew ; gcanellos@milbank.com; McLucas, William ; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
EXTERNAL SENDER
Matt:
It is clear from your responses that we have a fundamental disagreement as to the scope of the
Consent Order and BAM’s compliance with it. These issues, ranging from the scope,
substance, timing, and format of BAM’s document productions and interrogatory responses,
and now extending to depositions, have been set out extensively in prior correspondence and
our calls. We will be following up shortly regarding some of the broader set of issues and
outstanding items, which will likely need to be presented to the Court for resolution given
where we are.
In the interest of moving at least some discovery forward, while we disagree with your
objection to the number of depositions and continue to reserve all rights, we will amend our
current list to the following BAM deponents, subject to further modification based on an order
from the Court:
1.
2.
3.
4.
5.
6.
Rule 30(b)(6) of BAM Trading Inc. (notice with topics will follow)
Erik Kellogg
Brian Shroder
Jasmine Lee
Tao Zhang
Based on the dates you provided today, we will plan to depose Zhang on August 31.
Regarding Erik Kellogg, whom we noticed for August 29, we have confirmed that Michael
Fernandez of FGMK LLP is available to be deposed remotely on August 23, so we ask that
you provide alternative dates for Mr. Kellogg for August 24 or 25 or another day during the
week of the 28th, if he is unavailable on the 29th. Please also provide dates for the other
individuals, and we can negotiate dates for the 30(b)(6) deposition once you have reviewed the
forthcoming notice. We also ask, once again, that you confirm whether you are authorized to
and agree to accept service for the individuals listed above.
We will seek further relief from the Court regarding the number of depositions as necessary.
Given BAM’s position that we are only entitled to 10 depositions under the Consent Order and
our discussions to date, we understand that you oppose such a request, but let us know if you
would like to discuss further.Page 5 Finally, as to BAM’s position regarding the scope of communications BAM is willing to
produce, to date you have failed to elaborate on any purported burden, and as you
acknowledged we have already narrowed the scope of our requests for communications. You
have now for the first time expressed a willingness to run targeted email searches. As we
stated, BAM has access to the data and custodians and is in the best position to identify search
terms (and to determine whether email is in fact the most appropriate source of relevant
communications). If BAM would like to propose search parameters to mitigate its general
objections and refusal to produce communications to date, we will consider them. But such
proposal must be provided no later than tomorrow COB. We are not willing to have extended
negotiations further delay presenting the issue to the Court.
Finally, given the numerous unresolved discovery issues, we reserve our right to reopen any
deposition based on additional discovery received.
Regards,
Emmett
From: Martens, Matthew T.
Sent: Thursday, August 10, 2023 11:00 AM
To: Murphy, J. Emmett ; Beville, Matthew ; gcanellos@milbank.com; McLucas, William ; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
CAUTION: This email originated from outside of the organization. Do not click links or open
attachments unless you recognize the sender and know the content is safe.
Dear Emmett:
As an initial matter, we take issue with your suggestion that we have “unreasonably limited”
discovery to date. You conducted a multi-year investigation and uncovered no evidence of
misappropriation of client assets. Nevertheless, during this litigation, BAM provided a sworn
accounting, produced 194 documents (totaling 4,481 pages), and offered to make four witnesses
available for deposition. This is more than sufficient for what the Consent Order calls the “limited”
purposes of this expedited discovery. See Consent Order at 9 (authorizing “limited expedited
discovery”).
As for depositions, the Consent Order expressly provides that depositions are governed by FRCP
30(a), which includes a 10 deposition limit. See Consent Order at 9 (“Pursuant to Rule 30(a) . . . , the
SEC may take depositions”). While the Order states that these depositions do not count against the
limit that will apply to merits discovery, the expedited discovery permitted by the Consent Order is
itself subject to Rule 30(a)’s 10 deposition limit. Thus, your request for 14 depositions of BAM
employees, not to mention your deposition of the auditor, is inappropriate. Your suggestion that IPage 6 provided no basis for BAM’s objections to the additional depositions is incorrect. I explained in my
prior email that your request also violates FRCP 26(b)(1). BAM is willing to make available a
reasonable number of deponents, and in that regard has agreed to make Erik Kellogg, Sara
Sisenwein, Tao Zhang,
available for deposition.
We expect to provide proposed deposition dates shortly for the
witnesses.
Finally, as for your request for communications, we have repeatedly stated that we believe a
communications search in the context of expedited discovery is inappropriate and unnecessary for
your purposes. And the proposal in your August 2 email to “limit” your communications requests to
“all” communications that meet broadly defined criteria for 14 custodians is unreasonably
burdensome relative to the benefit, FRCP 26(b)(1), much less to do so by August 11. We fail to
understand how this burden can be justified, particularly given your years-long investigation and
now that BAM has provided a sworn accounting. Again, if you would like to request some targeted
email searches, we are amenable to such a request. But what you have proposed to date is
unreasonable.
Best regards,
--Matt
From: Murphy, J. Emmett
Sent: Wednesday, August 9, 2023 1:52 PM
To: Martens, Matthew T. ; Beville, Matthew ; gcanellos@milbank.com; McLucas, William ; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
EXTERNAL SENDER
Matt,
On August 2, we noticed 14 depositions of BAM employees, in part based on the
unreasonably limited discovery that BAM has provided and your repeated statements that the
SEC should substitute discovery we requested through documents and interrogatories by
“tak[ing] advantage of the availability of witnesses who are best positioned to answer your
questions.” M. Beville Letter, July 31, 2023. In response to the notices, on Friday BAM
proposed instead that we take the depositions of only Erik Kellogg, Sara Sisenwein, Tao
Zhang,
. You provided no basis for objecting to the depositions of other
witnesses other than by citing the total number of notices. We explained that the objection
solely to the number of deponents did not adequately address the scope of discovery to which
we are entitled. We cited as an example the shard holders, whose role is obviously central to
discovery the SEC is entitled to under the Consent Order. We also expressed our willingnessPage 7 to address burden concerns by potentially agreeing to shorter depositions of the shard holders.
Finally, we reiterated that our ability to prioritize or narrow the list has been hindered by
BAM’s failure to provide documents or other discovery about these witnesses and the topics
we expect them to address. We encouraged you to reconsider BAM’s position with these
issues in mind and get back to us.
Your email yesterday fails to address our concerns or provide an adequate basis for objecting
to the deposition notices. First, BAM has failed to provide any basis for objectin to the
depositions of Jasmin Lee
Second,
Your general objection to taking
including because we believe a number of the shard holders have relevant information beyond
their role as shard holder.
If you are not planning to offer alternative dates or agree to the depositions of all of the
noticed witnesses, please state your specific objection for each. We may be willing to at least
defer (and potentially withdraw) the deposition notices of some of the witnesses pending
completion of other depositions, depending on the information you provide and basis for the
objection. But without an appropriate basis for deferring or canceling these specific
depositions, we will plan to proceed with the depositions as noticed, absent an order from the
Court.
Based on our various communications regarding the depositions to date, in which you have
not raised any issue with service, we assume that you are authorized and agree to accept
service for all of the noticed witnesses (who we understand are all current BAM officers or
employees). Please let us know immediately if that is not the case and we will coordinate
service directly as necessary.
Finally, you state that the SEC has not offered a compromise concerning its request for “all
communications.” To the contrary, my August 2 email proposes that BAM produce
communications requested in our RFPs involving the noticed deponents, and the request is
limited both by time and subject matter by the RFPs and terms of the Consent Order, which
BAM acknowledges allows discovery relating to “the possession, custody, transfer, and
control of Customer Assets, including whether BAM can meet customer claims and
liabilities.” M. Beville Letter, July 31, 2023. We had previously discussed at least certain
representative categories of communications we would expect to see. You are in the best
position to assess the universe of responsive documents and propose a more limited scope (by
repository, custodian, search terms, or otherwise). We have repeatedly stated our willingness
to consider your proposals for a reasonable search for such responsive communications. We
read your responses to date as a refusal to produce any relevant communications for these
witnesses, and we reserve our right to seek relief on this issue from the Court.
Please confirm or provide alternative dates for Erik Kellogg, Sara Sisenwein, Tao Zhang,
i. noon tomorrow and provide the basis for your objection for each
of the other witnesses by COB tomorrow, so we can take any outstanding disputes to the
Court. It seems the issues are well defined enough for you to respond promptly in writing, but
if you feel a call would be productive we are available at 5:30 this evening.
Regards,
EmmettPage 8 From: Martens, Matthew T.
Sent: Tuesday, August 8, 2023 5:21 PM
To: Beville, Matthew ; gcanellos@milbank.com; McLucas,
William ; mlaroche@milbank.com; Adler, Jeremy ; Murphy, J. Emmett
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
CAUTION: This email originated from outside of the organization. Do not click links or open
attachments unless you recognize the sender and know the content is safe.
Dear Emmett:
As we have previously advised, we are prepared to make Erik Kellogg, Sara Sisenwein, Tao Zhang,
available for deposition and will work with you to identify acceptable dates for those
depositions to be conducted later this month. As for your request to depose all seven shard-holders,
we believe that this is improper under the Consent Order. During the hearings and mediation over
the shards held overseas, it was agreed that BAM would domesticate all seven shards such that they
are in the possession of individuals in the United States and thus subject to the jurisdiction of the
Court and the Court’s order precluding improper transfers of assets. Order at 1-2. BAM has complied
with that directive, and the SEC has identified no basis to now depose each of those domestic
custodians. The request for depositions of all seven domestic shard-holders is not “proportional to
the needs of the case” and “the burden and expense of the proposed discovery outweighs its likely
benefit.” Fed. R. Civ. P. 26(b)(1). That said, as an accommodation we are willing to make one
domestic shard-holder of your choice available for deposition without prejudice to your right to seek
depositions of other shard-holders if you can demonstrate good cause. Please advise which of the
seven your prefer. Finally, with regard to your request for “all” communications, we have set forth
our objections to that unduly broad request in our response to your document requests. You have
not proposed a narrowing in response. We are, of course, willing to consider more reasonable
proposals.
Best regards,
--Matt
From: Murphy, J. Emmett
Sent: Tuesday, August 8, 2023 1:45 PM
To: McLucas, William ; Smith, Tiffany ; Beville, Matthew ;
gcanellos@milbank.com; mlaroche@milbank.com; JDaSilva@milbank.com
Cc: Scarlato, Matthew ; Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
EXTERNAL SENDERPage 9 Counsel:
We write to follow up on the deposition notices sent on August 2 and related request for production
of the deponents’ communications. We understood that you were going to consider Friday’s
discussion regarding the depositions and get back to us with the deponents you would agree to
schedule. Please let us know as soon as possible -- and in any event no later than today -- your
position on the (1) deponents you agree to schedule and their availability (including any that can be
scheduled for next week); (2) basis for not agreeing to schedule the additional individuals we
noticed, which should be specific to each individual noticed and, as discussed, not simply based on
the number of depositions noticed; and (3) the production of communications for these noticed
deponents, which we asked for on a rolling basis to be completed by August 11. Particularly given
the approaching discovery deadline, we would like to reach an agreement on these issues to the
extent possible, or we will need to consider whether to bring the issue before the Court.
Emmett
From: Farer, Jennifer
Sent: Friday, August 4, 2023 4:42 PM
To: Adler, Jeremy ; Scarlato, Matthew
Cc: McLucas, William ; Smith, Tiffany ; Beville, Matthew ;
gcanellos@milbank.com; mlaroche@milbank.com; DaSilva, Joe
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
Jeremy,
We can do 5:30 today. Let us know if that works for you. If so, please send a dial-in.
Thanks.
Jennifer L. Farer
U.S. Securities and Exchange Commission
100 F Street N.E. | Washington, D.C. From: Adler, Jeremy
Sent: Friday, August 4, 2023 4:17 PM
To: Farer, Jennifer ; Scarlato, Matthew
Cc: McLucas, William ; Smith, Tiffany ; Beville, Matthew ;
gcanellos@milbank.com; mlaroche@milbank.com; DaSilva, Joe
Subject: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)Page 10 CAUTION: This email originated from outside of the organization. Do not click links or open
attachments unless you recognize the sender and know the content is safe.
Jen and Matt,
In response to certain of the issues raised by you in our call yesterday we propose the
following.
1) We will provide any documents BAM has that are relevant to the Ceffu role in creating
the new wallets for Customer Crypto Assets (as required by Section II.2. of the Consent
Order) and we will explain what we understand the process to entail. We will attempt
to do this by early next week.
2) On your request for depositions we propose that you take depositions of Erik Kellogg,
Sara Sisenwein and Tao Zhang, who runs BAM’s Clearing Team
We also propose that you depose
, a shard holder. If, after deposing
, you have additional questions concerning those holding the shards and
their use, we can discuss whether additional shard holders should be deposed.
3) On your request for communications related to the audit of BAM, we assume you have
all of the auditors’ workpapers. If your questions or concerns relate to the issue of the
custody agreement involving BHL and whether it was operational or not, we will
explain what we understand the facts are related to that arrangement and how it
worked.
Since the expedited discovery is addressed to matters “concerning the Customer Assets and
their possession, custody, control, transfer or movement, security segregation, availability and
any encumbrances or limitations . . . [that might make them unavailable],” we believe the
foregoing should address many of the questions you might have. However, we think it may
be helpful to discuss these items. Are you available for a call today at either 4:30 or 5pm ET?
Thanks,
Jeremy
Jeremy Adler | WilmerHale
7 World Trade Center
250 Greenwich Street
New York, NY 10007 USA
+1 212 295 6417 (t)
+1 212 230 8888 (f)
jeremy.adler@wilmerhale.com
Please consider the environment before printing this email.Page 11 This email message and any attachments are being sent by Wilmer Cutler Pickering Hale and Dorr LLP, are confidential, and may be
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PDF Page 1
PlainSite Cover Page
PDF Page 2
Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 1 of 11
EXHIBIT 14
PDF Page 3
Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 2 of 11
From:
To:
Cc:
Subject:
Date:
Murphy, J. Emmett
Martens, Matthew T.; Beville, Matthew; gcanellos@milbank.com; McLucas, William; mlaroche@milbank.com;
Adler, Jeremy
Smith, Tiffany; Scarlato, Matthew; Farer, Jennifer; Tenreiro, Jorge
RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
Wednesday, August 16, 2023 10:26:32 PM
Matt –
Please advise on date(s) for Mr. Shuster and locations for his and other scheduled depositions.
Thanks.
Emmett
From: Murphy, J. Emmett
Sent: Monday, August 14, 2023 9:27 PM
To: Martens, Matthew T. ; Beville, Matthew
; gcanellos@milbank.com; McLucas, William
; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
Matt,
We are not willing to withdraw the deposition notices of Mr. Shroder and Ms. Lee, and BAM
has not raised any specific objections to the notices of these two witnesses that would give us
a basis to do so. Despite our having had multiple communications regarding the depositions
generally, today is the first time BAM has even mentioned these two specific witnesses in the
nearly two weeks since we noticed their depositions. We also reiterate our request for dates
for Mr. Shuster. There is no basis in the Consent Order or the Federal Rules for BAM to
dictate whom the SEC may depose. For all depositions, we again ask that BAM propose
locations. We are happy to host any deposition at our DC headquarters.
As to documents, we reject your characterizations about our repeated requests for and multiple
discussions about communications, and will not spend any more time at this late stage
addressing each of them. We do note that the handful of communications that have been
produced in large part reflect a response to specific discussions on other document issues.
BAM’s position on communications is inconsistent with the Consent Order, and it appears we
will each be seeking relief from the Court on the issue.
Finally, on a separate document-related issue – we understand from counsel for FGMK that
they are withholding documents from production to the SEC based on BAM’s potential
assertion of work product protection. Please provide a log identifying each document and the
basis for such assertion by Thursday so we can evaluate and raise the issue with the Court, if
necessary.
Regards,
PDF Page 4
Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 3 of 11
Emmett
From: Martens, Matthew T.
Sent: Monday, August 14, 2023 8:14 AM
To: Murphy, J. Emmett ; Beville, Matthew
; gcanellos@milbank.com; McLucas, William
; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
CAUTION: This email originated from outside of the organization. Do not click links or open
attachments unless you recognize the sender and know the content is safe.
Dear Emmett:
We propose August 24 for Mr. Kellogg’s deposition and confirm August 31 for Mr. Zhang’s
deposition.
We do not agree to depositions of Brian Shroder or Jasmine Lee nor do we understand why
you intend to take them consistent with the purpose of the Consent Order and given the other
witnesses we’ve offered to make available.
We disagree with your assertion that we “have now for the first time expressed a willingness to run
targeted email searches.” We previously produced email communications based on a targeted
request. Moreover, we have asked you on several occasions to propose more limited requests, but
you have declined to do so. Regardless, we do not think it would be useful for us to propose search
parameters. We do not understand (and you have not explained) why you need communications to
assess the custody and security of customer assets, which leaves us guessing as to what subset of
communications about customer assets would satisfy your requests.
We assume we are at an impasse on the depositions of Mr. Shroder and Ms. Lee and the production
of communications. Please let us know by 5pm today whether you withdraw your requests;
otherwise we will move for a protective order with the Court.
Finally, we agree to accept service on behalf of the individuals identified below.
Best regards,
--Matt
From: Murphy, J. Emmett
PDF Page 5
Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 4 of 11
Sent: Thursday, August 10, 2023 7:43 PM
To: Martens, Matthew T. ; Beville, Matthew
; gcanellos@milbank.com; McLucas, William
; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
EXTERNAL SENDER
Matt:
It is clear from your responses that we have a fundamental disagreement as to the scope of the
Consent Order and BAM’s compliance with it. These issues, ranging from the scope,
substance, timing, and format of BAM’s document productions and interrogatory responses,
and now extending to depositions, have been set out extensively in prior correspondence and
our calls. We will be following up shortly regarding some of the broader set of issues and
outstanding items, which will likely need to be presented to the Court for resolution given
where we are.
In the interest of moving at least some discovery forward, while we disagree with your
objection to the number of depositions and continue to reserve all rights, we will amend our
current list to the following BAM deponents, subject to further modification based on an order
from the Court:
1.
2.
3.
4.
5.
6.
Rule 30(b)(6) of BAM Trading Inc. (notice with topics will follow)
Erik Kellogg
Brian Shroder
Jasmine Lee
Tao Zhang
Based on the dates you provided today, we will plan to depose Zhang on August 31.
Regarding Erik Kellogg, whom we noticed for August 29, we have confirmed that Michael
Fernandez of FGMK LLP is available to be deposed remotely on August 23, so we ask that
you provide alternative dates for Mr. Kellogg for August 24 or 25 or another day during the
week of the 28th, if he is unavailable on the 29th. Please also provide dates for the other
individuals, and we can negotiate dates for the 30(b)(6) deposition once you have reviewed the
forthcoming notice. We also ask, once again, that you confirm whether you are authorized to
and agree to accept service for the individuals listed above.
We will seek further relief from the Court regarding the number of depositions as necessary.
Given BAM’s position that we are only entitled to 10 depositions under the Consent Order and
our discussions to date, we understand that you oppose such a request, but let us know if you
would like to discuss further.
PDF Page 6
Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 5 of 11
Finally, as to BAM’s position regarding the scope of communications BAM is willing to
produce, to date you have failed to elaborate on any purported burden, and as you
acknowledged we have already narrowed the scope of our requests for communications. You
have now for the first time expressed a willingness to run targeted email searches. As we
stated, BAM has access to the data and custodians and is in the best position to identify search
terms (and to determine whether email is in fact the most appropriate source of relevant
communications). If BAM would like to propose search parameters to mitigate its general
objections and refusal to produce communications to date, we will consider them. But such
proposal must be provided no later than tomorrow COB. We are not willing to have extended
negotiations further delay presenting the issue to the Court.
Finally, given the numerous unresolved discovery issues, we reserve our right to reopen any
deposition based on additional discovery received.
Regards,
Emmett
From: Martens, Matthew T.
Sent: Thursday, August 10, 2023 11:00 AM
To: Murphy, J. Emmett ; Beville, Matthew
; gcanellos@milbank.com; McLucas, William
; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
CAUTION: This email originated from outside of the organization. Do not click links or open
attachments unless you recognize the sender and know the content is safe.
Dear Emmett:
As an initial matter, we take issue with your suggestion that we have “unreasonably limited”
discovery to date. You conducted a multi-year investigation and uncovered no evidence of
misappropriation of client assets. Nevertheless, during this litigation, BAM provided a sworn
accounting, produced 194 documents (totaling 4,481 pages), and offered to make four witnesses
available for deposition. This is more than sufficient for what the Consent Order calls the “limited”
purposes of this expedited discovery. See Consent Order at 9 (authorizing “limited expedited
discovery”).
As for depositions, the Consent Order expressly provides that depositions are governed by FRCP
30(a), which includes a 10 deposition limit. See Consent Order at 9 (“Pursuant to Rule 30(a) . . . , the
SEC may take depositions”). While the Order states that these depositions do not count against the
limit that will apply to merits discovery, the expedited discovery permitted by the Consent Order is
itself subject to Rule 30(a)’s 10 deposition limit. Thus, your request for 14 depositions of BAM
employees, not to mention your deposition of the auditor, is inappropriate. Your suggestion that I
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Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 6 of 11
provided no basis for BAM’s objections to the additional depositions is incorrect. I explained in my
prior email that your request also violates FRCP 26(b)(1). BAM is willing to make available a
reasonable number of deponents, and in that regard has agreed to make Erik Kellogg, Sara
Sisenwein, Tao Zhang,
available for deposition.
We expect to provide proposed deposition dates shortly for the
witnesses.
Finally, as for your request for communications, we have repeatedly stated that we believe a
communications search in the context of expedited discovery is inappropriate and unnecessary for
your purposes. And the proposal in your August 2 email to “limit” your communications requests to
“all” communications that meet broadly defined criteria for 14 custodians is unreasonably
burdensome relative to the benefit, FRCP 26(b)(1), much less to do so by August 11. We fail to
understand how this burden can be justified, particularly given your years-long investigation and
now that BAM has provided a sworn accounting. Again, if you would like to request some targeted
email searches, we are amenable to such a request. But what you have proposed to date is
unreasonable.
Best regards,
--Matt
From: Murphy, J. Emmett
Sent: Wednesday, August 9, 2023 1:52 PM
To: Martens, Matthew T. ; Beville, Matthew
; gcanellos@milbank.com; McLucas, William
; mlaroche@milbank.com; Adler, Jeremy
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
EXTERNAL SENDER
Matt,
On August 2, we noticed 14 depositions of BAM employees, in part based on the
unreasonably limited discovery that BAM has provided and your repeated statements that the
SEC should substitute discovery we requested through documents and interrogatories by
“tak[ing] advantage of the availability of witnesses who are best positioned to answer your
questions.” M. Beville Letter, July 31, 2023. In response to the notices, on Friday BAM
proposed instead that we take the depositions of only Erik Kellogg, Sara Sisenwein, Tao
Zhang,
. You provided no basis for objecting to the depositions of other
witnesses other than by citing the total number of notices. We explained that the objection
solely to the number of deponents did not adequately address the scope of discovery to which
we are entitled. We cited as an example the shard holders, whose role is obviously central to
discovery the SEC is entitled to under the Consent Order. We also expressed our willingness
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Case 1:23-cv-01599-ABJ-ZMF Document110-3 Filed 09/14/23 Page 7 of 11
to address burden concerns by potentially agreeing to shorter depositions of the shard holders.
Finally, we reiterated that our ability to prioritize or narrow the list has been hindered by
BAM’s failure to provide documents or other discovery about these witnesses and the topics
we expect them to address. We encouraged you to reconsider BAM’s position with these
issues in mind and get back to us.
Your email yesterday fails to address our concerns or provide an adequate basis for objecting
to the deposition notices. First, BAM has failed to provide any basis for objectin to the
depositions of Jasmin Lee
Second,
Your general objection to taking
including because we believe a number of the shard holders have relevant information beyond
their role as shard holder.
If you are not planning to offer alternative dates or agree to the depositions of all of the
noticed witnesses, please state your specific objection for each. We may be willing to at least
defer (and potentially withdraw) the deposition notices of some of the witnesses pending
completion of other depositions, depending on the information you provide and basis for the
objection. But without an appropriate basis for deferring or canceling these specific
depositions, we will plan to proceed with the depositions as noticed, absent an order from the
Court.
Based on our various communications regarding the depositions to date, in which you have
not raised any issue with service, we assume that you are authorized and agree to accept
service for all of the noticed witnesses (who we understand are all current BAM officers or
employees). Please let us know immediately if that is not the case and we will coordinate
service directly as necessary.
Finally, you state that the SEC has not offered a compromise concerning its request for “all
communications.” To the contrary, my August 2 email proposes that BAM produce
communications requested in our RFPs involving the noticed deponents, and the request is
limited both by time and subject matter by the RFPs and terms of the Consent Order, which
BAM acknowledges allows discovery relating to “the possession, custody, transfer, and
control of Customer Assets, including whether BAM can meet customer claims and
liabilities.” M. Beville Letter, July 31, 2023. We had previously discussed at least certain
representative categories of communications we would expect to see. You are in the best
position to assess the universe of responsive documents and propose a more limited scope (by
repository, custodian, search terms, or otherwise). We have repeatedly stated our willingness
to consider your proposals for a reasonable search for such responsive communications. We
read your responses to date as a refusal to produce any relevant communications for these
witnesses, and we reserve our right to seek relief on this issue from the Court.
Please confirm or provide alternative dates for Erik Kellogg, Sara Sisenwein, Tao Zhang,
i. noon tomorrow and provide the basis for your objection for each
of the other witnesses by COB tomorrow, so we can take any outstanding disputes to the
Court. It seems the issues are well defined enough for you to respond promptly in writing, but
if you feel a call would be productive we are available at 5:30 this evening.
Regards,
Emmett
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Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 8 of 11
From: Martens, Matthew T.
Sent: Tuesday, August 8, 2023 5:21 PM
To: Beville, Matthew ; gcanellos@milbank.com; McLucas,
William ; mlaroche@milbank.com; Adler, Jeremy
; Murphy, J. Emmett
Cc: Smith, Tiffany ; Scarlato, Matthew ;
Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
CAUTION: This email originated from outside of the organization. Do not click links or open
attachments unless you recognize the sender and know the content is safe.
Dear Emmett:
As we have previously advised, we are prepared to make Erik Kellogg, Sara Sisenwein, Tao Zhang,
available for deposition and will work with you to identify acceptable dates for those
depositions to be conducted later this month. As for your request to depose all seven shard-holders,
we believe that this is improper under the Consent Order. During the hearings and mediation over
the shards held overseas, it was agreed that BAM would domesticate all seven shards such that they
are in the possession of individuals in the United States and thus subject to the jurisdiction of the
Court and the Court’s order precluding improper transfers of assets. Order at 1-2. BAM has complied
with that directive, and the SEC has identified no basis to now depose each of those domestic
custodians. The request for depositions of all seven domestic shard-holders is not “proportional to
the needs of the case” and “the burden and expense of the proposed discovery outweighs its likely
benefit.” Fed. R. Civ. P. 26(b)(1). That said, as an accommodation we are willing to make one
domestic shard-holder of your choice available for deposition without prejudice to your right to seek
depositions of other shard-holders if you can demonstrate good cause. Please advise which of the
seven your prefer. Finally, with regard to your request for “all” communications, we have set forth
our objections to that unduly broad request in our response to your document requests. You have
not proposed a narrowing in response. We are, of course, willing to consider more reasonable
proposals.
Best regards,
--Matt
From: Murphy, J. Emmett
Sent: Tuesday, August 8, 2023 1:45 PM
To: McLucas, William ; Smith, Tiffany
; Beville, Matthew ;
gcanellos@milbank.com; mlaroche@milbank.com; JDaSilva@milbank.com
Cc: Scarlato, Matthew ; Farer, Jennifer ; Tenreiro, Jorge
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
EXTERNAL SENDER
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Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 9 of 11
Counsel:
We write to follow up on the deposition notices sent on August 2 and related request for production
of the deponents’ communications. We understood that you were going to consider Friday’s
discussion regarding the depositions and get back to us with the deponents you would agree to
schedule. Please let us know as soon as possible -- and in any event no later than today -- your
position on the (1) deponents you agree to schedule and their availability (including any that can be
scheduled for next week); (2) basis for not agreeing to schedule the additional individuals we
noticed, which should be specific to each individual noticed and, as discussed, not simply based on
the number of depositions noticed; and (3) the production of communications for these noticed
deponents, which we asked for on a rolling basis to be completed by August 11. Particularly given
the approaching discovery deadline, we would like to reach an agreement on these issues to the
extent possible, or we will need to consider whether to bring the issue before the Court.
Emmett
From: Farer, Jennifer
Sent: Friday, August 4, 2023 4:42 PM
To: Adler, Jeremy ; Scarlato, Matthew
Cc: McLucas, William ; Smith, Tiffany
; Beville, Matthew ;
gcanellos@milbank.com; mlaroche@milbank.com; DaSilva, Joe
Subject: RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
Jeremy,
We can do 5:30 today. Let us know if that works for you. If so, please send a dial-in.
Thanks.
Jennifer L. Farer
U.S. Securities and Exchange Commission
100 F Street N.E. | Washington, D.C. 20549
From: Adler, Jeremy
Sent: Friday, August 4, 2023 4:17 PM
To: Farer, Jennifer ; Scarlato, Matthew
Cc: McLucas, William ; Smith, Tiffany
; Beville, Matthew ;
gcanellos@milbank.com; mlaroche@milbank.com; DaSilva, Joe
Subject: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
PDF Page 11
Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 10 of 11
CAUTION: This email originated from outside of the organization. Do not click links or open
attachments unless you recognize the sender and know the content is safe.
Jen and Matt,
In response to certain of the issues raised by you in our call yesterday we propose the
following.
1) We will provide any documents BAM has that are relevant to the Ceffu role in creating
the new wallets for Customer Crypto Assets (as required by Section II.2. of the Consent
Order) and we will explain what we understand the process to entail. We will attempt
to do this by early next week.
2) On your request for depositions we propose that you take depositions of Erik Kellogg,
Sara Sisenwein and Tao Zhang, who runs BAM’s Clearing Team
We also propose that you depose
, a shard holder. If, after deposing
, you have additional questions concerning those holding the shards and
their use, we can discuss whether additional shard holders should be deposed.
3) On your request for communications related to the audit of BAM, we assume you have
all of the auditors’ workpapers. If your questions or concerns relate to the issue of the
custody agreement involving BHL and whether it was operational or not, we will
explain what we understand the facts are related to that arrangement and how it
worked.
Since the expedited discovery is addressed to matters “concerning the Customer Assets and
their possession, custody, control, transfer or movement, security segregation, availability and
any encumbrances or limitations . . . [that might make them unavailable],” we believe the
foregoing should address many of the questions you might have. However, we think it may
be helpful to discuss these items. Are you available for a call today at either 4:30 or 5pm ET?
Thanks,
Jeremy
Jeremy Adler | WilmerHale
7 World Trade Center
250 Greenwich Street
New York, NY 10007 USA
+1 212 295 6417 (t)
+1 212 230 8888 (f)
jeremy.adler@wilmerhale.com
Please consider the environment before printing this email.
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Case 1:23-cv-01599-ABJ-ZMF Document 110-3 Filed 09/14/23 Page 11 of 11
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