SECURITIES AND EXCHANGE COMMISSION v. BINANCE HOLDINGS LIMITED et al Document 114: Motion to Compel, Attachment 5

District Of Columbia District Court
Case No. 1:23-cv-01599-ABJ-ZMF
Filed September 15, 2023

MOTION to Compel by SECURITIES AND EXCHANGE COMMISSION. (Attachments: # (1) Memorandum in Support, # (2) Declaration of Jennifer Farer in Support of SEC Motion to Compel, # (3) Exhibit 1, # (4) Exhibit 2, # (5) Exhibit 3, # (6) Exhibit 4, # (7) Exhibit 5, # (8) Exhibit 6, # (9) Exhibit 7, # (10) Exhibit 8, # (11) Exhibit 9, # (12) Exhibit 10, # (13) Exhibit 11, # (14) Exhibit 12, # (15) Exhibit 13, # (16) Exhibit 14, # (17) Exhibit 15, # (18) Exhibit 16, # (19) Exhibit 19, # (20) Exhibit 21, # (21) Exhibit 22, # (22) Exhibit 26, # (23) Exhibit 27, # (24) Exhibit 28, # (25) Text of Proposed Order)(zjm)

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Page 1 EXHIBIT 3
Page 2 UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________________
SECURITIES AND EXCHANGE
)
COMMISSION,
)
)
Plaintiff,
)
)
v.
)
)
BINANCE HOLDINGS LIMITED,
)
BAM TRADING SERVICES INC.,
)
BAM MANAGEMENT US HOLDINGS
)
INC., AND CHANGPENG ZHAO,
)
)
Defendants.
)
__________________________________________)
No. 1:23-cv-01599-ABJ
PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S
FIRST SET OF INTERROGATORIES TO DEFENDANTS BAM
TRADING SERVICES INC. AND BAM MANAGEMENT US HOLDINGS INC.
Plaintiff Securities and Exchange Commission (the “SEC” or the “Commission”) hereby
serves the following first set of interrogatories (“Interrogatories”) to Defendants BAM Trading
Services Inc. (“BAM Trading”) and BAM Management US Holdings Inc. (“BAM
Management”) (collectively and incorporating the definitions below, the “BAM Entities”)
pursuant to Federal Rules of Civil Procedure 26 and 33, the Local Civil Rules for the United
States District Court for the District of Columbia, and the Court’s June 17, 2023 Consent Order,
ECF No. 71, to be answered separately, fully, and under oath within twenty (20) days of service.
DEFINITIONS AND INSTRUCTIONS
1.
“BAM Trading” means Defendant BAM Trading Services Inc., and doing
business as Binance.US, and all predecessors, successors, parents, subsidiaries, affiliates,
officers, directors, employees, agents, general partners, limited partners, partnerships and aliases,
code names, or trade or business names used by any of the foregoing, and all entities in which
Page 3 Defendant BAM Trading Services Inc. has or has had a controlling interest, such as a
corporation, general partnership, limited partnership, or trade or business name.
2.
“BAM Management” means BAM Management US Holdings Inc., and all
predecessors, successors, parents, subsidiaries, affiliates, officers, directors, employees, agents,
general partners, limited partners, partnerships and aliases, code names, or trade or business
names used by any of the foregoing, and all entities in which BAM Management US Holdings
Inc. has or has had a controlling interest, such as a corporation, general partnership, limited
partnership, or trade or business name.
3.
“Binance” means Binance Holdings Limited, and all predecessors, successors,
parents, subsidiaries, affiliates, officers, directors, employees, agents, general partners, limited
partners, partnerships and aliases, code names, or trade or business names used by any of the
foregoing, and all entities in which Binance Holdings Limited has or has had a controlling
interest, such as a corporation, general partnership, limited partnership, or trade or business
name.
4.
Reference to an entity in these Interrogatories should be interpreted to include that
entity’s parents, subsidiaries, affiliates, predecessors, successors, officers, directors, employees,
agents, partners, and independent contractors, as well as aliases, code names, trade names, or
business names used by, or formerly used by, any of the foregoing, as required for a complete
response.
5.
Reference to an individual in these Interrogatories should be interpreted to include
that individual’s counsel, agents, representatives, or any other Person or entity acting or
purporting to act on his or her behalf, as required for a complete response.
2
Page 4 6.
“Concerning” means directly or indirectly, in whole or in part, relating to,
referring to, describing, evidencing, constituting, recording, evaluating, substantiating, alluding
to, in connection with, commenting on, regarding, discussing, showing, analyzing, or reflecting.
7.
“Customers,” “Private and Administrative Keys,” “New Private and
Administrative Keys,” “Customer Fiat Assets,” “Customer Crypto Assets,” “Customer Assets,”
“Binance Entities,” “BAM Ordinary Course Business Expenses,” and “Staking Assets” are
defined in accordance with the Court’s June 17, 2023 Consent Order, ECF No. 71.
8.
“Document” is defined to be synonymous in meaning and equal in scope to the
usage of the term “documents or electronically stored information” in Fed. R. Civ. P.
34(a)(1)(A). A draft or non-identical copy is a separate document within the meaning of this
term.
9.
“Communication” means any correspondence, contact, discussion, e-mail, instant
message, text message, Telegram or other electronic message, or any other kind of oral or written
exchange or transmission of information (in the form of facts, ideas, inquiries, or otherwise) and
any response thereto between two or more Persons or entities, including, without limitation, all
telephone conversations, face-to-face meetings or conversations, internal or external discussions,
or exchanges of a Document or Documents.
10.
“Person” means any natural person or any legal entity, including, without
limitation, any business or governmental entity or association.
11.
“You” and “Your” means the Person(s) to whom or entity to which this subpoena
was issued.
12.
“Agreement” means any actual or contemplated (i) written or oral Agreement; (ii)
term or provision of such Agreement; or (iii) amendment of any nature or termination of such
3
Page 5 Agreement. A request for any Agreement, or Documents or Communications Concerning any
Agreement, among or between specified parties includes a request for all Documents and
Communications Concerning: (i) any actual or contemplated Agreement among or between such
parties, whether or not such Agreement included any other Person; (ii) the drafting or negotiation
of any such Agreement; (iii) any actual or contemplated demand, request, or application for any
such Agreement, and any response thereto; and (iv) any actual or contemplated objection or
refusal to enter into any such Agreement, and any response thereto.
13.
“Identify” means:
a. With respect to a communication, the date of such communication, the
identification of each party to the communication, the location of (and position
held by) each such party at the time of the communication, the substance,
contents and subject matter thereof, the method of such communication (e.g.,
in person or by telephone), and if the communication has been recorded,
documented, summarized, transcribed or otherwise referred to in a document,
all such documents;
b. With respect to circumstances, a detailed description of the underlying
happening, events, communications, and occurrences related to the subject
matter of the request, as well as the timing and time period of the relevant
happening, events, and occurrences;
c. With respect to the basis for a statement, contention, fact or defense, a
complete and detailed description of the facts, events, Persons,
communications, documents, laws, theories, and principals that relate to or
support the subject matter of the interrogatory, with sufficient specificity to
allow the court or a finder of fact to evaluate the merits of the claimed basis;
d. With respect to an oral statement, identify all Persons making the statement, all
Persons to whom the statement was made, the date of such statement, where
such statement was made, or if by telephone, the Persons participating in the
telephone call, the Persons making the call, and describe the substance of such
statement; and
e. With respect to a transaction, the date, customer, product, purchase order
number(s), invoice number(s), or other identifying information, and all Persons
involved in the transaction.
4
Page 6 14.
In addition to the foregoing, “identify and describe in detail” should be read to
include (1) identification of all Persons involved in or with knowledge of the subject matter of the
request and the information you believe them to possess, and (2) identification of all documents
and communications related to the subject matter of the request.
15.
16.
The following rules of construction apply:
a.
“All,” “any,” and “each” shall each be construed as encompassing any and
all;
b.
“And” and “or” shall be construed either disjunctively or conjunctively as
necessary to bring within the scope of the discovery request all responses
that might otherwise be construed to be outside of its scope;
c.
The use of the singular form of any word includes the plural and vice
versa; and
d.
The functional words “each,” “every,” “any,” and “all” shall each be
deemed to include each of the other functional words.
Unless otherwise stated, the relevant time period for these Interrogatories is
November 1, 2022, to the present.
17.
Where knowledge, information, documents, or communications are requested,
such requests include knowledge, information, documents, or communications within your
possession, care, custody, or control, as well as Persons with whom you associate, including
family members, friends, business associates, attorneys, representatives, and agents.
18.
If you cannot respond fully to any Interrogatory, you should, nonetheless, answer
each to the greatest extent possible, and provide an explanation as to: (a) the nature of the
information or knowledge that cannot be furnished; (b) why such information or knowledge
cannot be provided; and (c) the location of the source of such information, as applicable.
5
Page 7 19.
Pursuant to Rule 33(b)(4), if and to the extent that you object to any Interrogatory
or portion thereof, you must state the grounds for objection with specificity. Any ground not
stated in a timely objection is waived unless the court, for good cause, excuses the failure.
20.
These Interrogatories shall be deemed continuing, so as to require supplemental
response(s) if and to the extent that Defendant obtains different or additional information and/or
discovers additional documents or communications after service of his original response. Such
supplemental responses shall be served from time to time, but not later than 20 days after such
additional information and/or document or communication has been obtained or discovered.
INTERROGATORIES
1.
Identify all Persons who have access to, possession, custody, or control of any
Customer Assets, the fiat or crypto assets of any of the BAM Entities, or any accounts or crypto
asset wallets holding Customer Assets or the fiat or crypto assets of the BAM Entities, including,
but not limited to, (i) their employment history, including job titles, during the last seven years,
including whether they have been employed, affiliated with, or otherwise received compensation
from, any of the BAM Entities, Binance Entities, or Zhao; (ii) their residence during the past
three years and physical location while working for any of the BAM Entities, Binance Entities,
or Zhao; and (iii) the time period and nature of their access, possession, custody, or control of
Customer Assets, the fiat or crypto assets of any of the BAM Entities, or any accounts or crypto
asset wallets holding Customer Assets or the fiat or crypto assets of the BAM Entities.
2.
Identify all Persons who have access to, possession, custody, or control of Private
and Administrative Keys or New Private and Administrative Keys or other software or protocols
Concerning the deposit, custody, control, security, transfer, segregation, or withdrawal of
Customer Crypto Assets, including, but not limited to, (i) their employment history, including
6
Page 8 job titles, during the last seven years, including whether they have been employed, affiliated
with, or otherwise received compensation from any of the BAM Entities, Binance Entities, or
Zhao; (ii) their residence during the past three years and physical location while working for any
of the BAM Entities, Binance Entities, or Zhao; and (iii) the time period in which they held such
Private and administrative Private and Administrative Keys or New Private and Administrative
Keys or other software or protocols responsive to this Interrogatory. This response should
include the date when any Private and Administrative Key or New Private and Administrative
Key holder who was a former employee or in any way affiliated with any of the Binance Entities
ended such employment or affiliation and started employment with BAM Trading or BAM
Management.
3.
Identify all Persons involved in, designated to, and/or having authority over the
Treasury, Clearing, Security, SecOps, Fraud & Risk, Legal, Compliance, CX, and Custody
Partners Teams, including the Persons associated with the following roles: Clearing Member,
Clearing Lead, Treasury Member, Treasury Lead, CISO/Security, CFO, VP/Treasury, CX Agent,
Fraud/Risk Member (see Binance.US Digital Asset & Custody Operations Policy at 4/18, 6/18 BTS00833839, at BTS00833841), or any other individual or entity that are otherwise involved in
the custody, control, security, clearing, settlement, deposits, transfer, withdrawals, movement,
segregation, restrictions, or other management of Customer Assets. The response should
include, but is not limited to, (i) their employment history, including job titles, over the last seven
years, including whether they have been employed by, affiliated with, or otherwise received
compensation from any of the BAM Entities, Binance Entities, or Zhao; and (ii) their residence
during the past three years and physical location while working for any of the BAM Entities,
Binance Entities, or Zhao.
7
Page 9 4.
Identify all BAM Trading and BAM Management officers, employees, and
contractors, as of the date of the filing of the SEC’s Complaint, ECF No. 1, including, but not
limited to, (i) their employment history, including job titles, during the last five years; (ii) any
current or past relationship or affiliation with any of the Binance Entities or Zhao; and (iii) their
residence during the past three years and physical location while working for any of the BAM
Entities, Binance Entities, or Zhao.
5.
Identify any Persons with any equity or other ownership interest in BAM Trading
and BAM Management, and any changes to the ownership interests of the BAM Entities during
the relevant time period.
6.
Identify and describe in detail BAM Trading’s policies, procedures, protocols,
and controls for the possession, custody, control, transfer, movement, security, segregation,
availability, and any encumbrances or limitations of Customer Assets, including (i) the Person(s)
involved in their development, maintenance, performance, operation, and enforcement; and (ii)
any changes in those policies, procedures, protocols, and controls during the relevant time
period.
7.
Identify all crypto asset wallet addresses that are “white listed” for transfers to or
from crypto asset wallets holding Customer Assets, and describe in detail the process by which
new crypto asset wallets could be whitelisted, including, but not limited to, the identification of
all Persons involved in the whitelisting process, and their employment history over the last seven
years, including whether they have been employed by, affiliated with, or otherwise received
compensation from any of the BAM Entities, Binance Entities, or Zhao.
8.
Identify all Documents, Communications, and other evidence to support your
contention that the Wallet Custody Agreement between Binance and BAM Trading was “never
8
Page 10 operationalized” and “was never actually implemented and did not govern BAM’s custody
practices,” see, e.g., BAM Trading Opp. Br., ECF No. 40, at 13, including, but not limited to, all
Documents, Communications, and other evidence you rely upon to rebut (i) BAM Trading’s
current CEO’s affirmation to BAM Trading’s auditors that Binance could “exert[] control over
any digital wallet holding either corporate or custodial digital assets held on [BAM Trading’s]
behalf,” see SEC TRO Mem., ECF No. 28, Ex. A-72, at pg. 4; id. Ex. A-73, at pg. 9; (ii) BAM
Trading’s financial statements stating that, at least until December 1, 2022, Customer Crypto
Assets and company crypto assets “were held in custody accounts through the Wallet Custody
Agreement.” Id. Ex. A-74, at BTS00833810; and (iii) counsel for BAM Trading’s submissions
to SEC staff that identified Binance as its custodian of crypto assets, see, e.g., BTS00042025, at
BTS00058738.
9.
Identify all Persons that have or had the role and responsibilities or otherwise
performed or continue to perform the services identified in the Wallet Custody Agreement,
whether or not such role, responsibilities, or services were pursuant to any formal agreement,
including, but not limited to, (i) the role, responsibility, and service(s) performed by such
Person(s); and (ii) the corresponding dates such Person(s) had such role or responsibility or
performed such service(s).
10.
Identify all Documents and Communications Concerning internal or external
audits of the BAM Entities’ possession, custody, control, transfer or movement, security,
segregation, availability, and any encumbrances or limitations to its Customer Assets.
11.
Identify all Documents, Communications, or other evidence that the BAM
Entities may contend rebuts BAM Trading’s auditor’s finding in May 2022 that BAM Trading
“is dependent on the [Binance].com custodian to tell them the addresses holding the assets,” and
9
Page 11 that it “makes it very difficult to ensure the Company is fully collateralized at specific points in
time,” SEC TRO Mem., Ex. A-89, at Armanino-BAM-000134, including whether You contend
that the statement was not true when the finding was made, and/or is not true today.
12.
Identify and describe in detail the basis for the decision to maintain custody or
control of any Customer Assets, including Staking Assets, and any Private and Administrative
Keys outside of the United States, including the Persons involved in such discussions and
decisions, and their employment history or any other relationship or agreement with any of the
BAM Entities, Binance Entities, or Zhao.
13.
Identify any Customer Assets or fiat or corporate assets of any of the BAM
Entities, including Private and Administrative Keys, that are held outside of the United States or
controlled by Persons outside of the United States, including, but not limited to, (i) the type of
asset; (ii) current value of the asset; (iii) where the asset is located; (iv) how it is held; (v) the
name and contact information of the Persons with custody and control of such assets;(vi) the
relationship or affiliation of such Persons with any of the BAM or Binance Entities; and (vii) the
time period the assets or keys have been outside of the United States.
14.
Identify and describe in detail the role of any of the Binance Entities, including
Sigma Chain and Merit Peak, in the possession, custody, or control of Customer Assets.
15.
Identify and describe in detail any agreement, relationship, affiliation, or
association between any of the Binance Entities and any Person with any access, possession,
authority, custody, or control of any Customer Assets, fiat or crypto assets of any of the BAM
Entities, or any account or wallet holding Customer Assets or the fiat or crypto assets of any of
the BAM Entities, including, but not limited to, the extent to which any of the Binance Entities
or Zhao has the authority over or the ability to direct or instruct such Persons.
10
Page 12 16.
For all crypto asset wallets associated with the BAM Entities or Binance.US
trading platform, identify each of the assets held in each wallet and the volume and the current
value of each asset (including the value of each asset in U.S. Dollars) held in each wallet.
17.
Identify and describe in detail all systems and Persons involved in the
management of any accounts, crypto asset wallets, Customer Assets, and fiat or crypto assets of
the BAM Entities.
18.
Identify and describe in detail all policies, procedures, protocols, and controls
Concerning or referenced in the Binance.US Digital Asset & Custody Operations Policy,
including identification of the Person(s) involved and their functions or roles.
19.
Identify and describe in detail how each category of Customer Assets – including
Customer Crypto Assets, Staking Assets, and Customer Fiat Assets – are segregated, including
from any fiat or crypto assets of the BAM Entities, Binance Entities, Zhao, or any other entity or
individual.
20.
Identify and describe in detail the validators of the company’s staking program
and BNB blockchain, including any affiliation or other relationship they have with the Binance
Entities, the BAM Entities, or Zhao.
21.
Identify whether any BNB wallet, including the omnibus deposit wallet, is a smart
contract.
22.
For each blockchain for which the BAM Entities have any crypto asset wallets for
company crypto assets or Customer Assets, identify and describe in detail the following:
a.
how the wallets were established;
b.
the Person(s) who set up, maintain, have any access to, custody, or control
over the wallets;
c.
how they are administrated and operated and by whom;
11
Page 13 23.
d.
information about the coding and software that governs the wallets;
e.
the Persons who hold the Private and Administrative Keys or New Private
and Administrative Keys;
f.
how the keys are issued and held;
g.
the security or consensus protocol terms and other governing policies,
procedures, protocols, or controls;
h.
the Persons with any authority or control to change the keys, any protocol
that governs any wallet, or any other authority, control, or access with
respect to administration or operation of the wallet;
i.
the authority and role of any of the Binance Entities or Zhao with respect to
access, custody, control, administration, and operation of the wallets and
Customer Assets, including Concerning the deposit, transfer, custody,
control, and withdrawal of Customer Assets
Identify all Documents and Communications reviewed or relied upon in preparing
the response to these Interrogatories or otherwise related to the responses to these Interrogatories.
24.
Identify all Persons who provided information in response to these
Interrogatories, and describe in detail the information they provided.
Dated: June 23,
Respectfully submitted,
s/Matthew Scarlato
Matthew Scarlato (D.C. Bar No. 484124)
Jennifer L. Farer (D.C. Bar No. 1013915)
J. Emmett Murphy
David Nasse
Jorge Tenreiro
SECURITIES AND EXCHANGE
COMMISSION
(202) 551-3749 (Scarlato)
scarlatom@sec.gov
farerj@sec.gov
murphyjoh@sec.gov
Attorneys for Plaintiff
12
Page 14 CERTIFICATE OF SERVICE
I hereby certify that, on June 23, 2023, I served, via email, the foregoing Plaintiff’s First
Set of Interrogatories to Defendants BAM Trading Services Inc. and BAM Management US
Holdings Inc. on the individuals and entities identified below:
Michael Celio
Mary Beth Maloney
Daniel W. Nelson
Jason J. Mendro
Stephanie Brooker
M. Kendall Day
Richard W. Grime
GIBSON, DUNN &
CRUTCHER LLP
MCelio@gibsondunn.com
MMaloney@gibsondunn.com
DNelson@gibsondunn.com
JMendro@gibsondunn.com
SBrooker@gibsondunn.com
KDay@gibsondunn.com
RGrime@gibsondunn.com
Andrew M. Leblanc
George Canellos
Adam Fee
Matthew Laroche
MILBANK LLP
aleblanc@milbank.com
gcanellos@milbank.com
afee@milbank.com
mlaroche@milbank.com
Attorneys for Defendant Binance
Holdings Limited
Attorneys for Defendants BAM Trading Services
Inc. and BAM Management Holdings US Inc.
Matthew T. Martens
William R. McLucas
Tiffany J. Smith
WILMER CUTLER PICKERING HALE
AND DORR LLP
matthew.martens@wilmerhale.com
william.mclucas@wilmerhale.com
tiffany.smith@wilmerhale.com
13
Page 15 Abid R. Qureshi
William R. Baker, III
Michael E. Bern
Douglas K. Yatter
Benjamin Naftalis
Heather A. Waller
Melanie M. Blunschi
LATHAM & WATKINS LLP
abid.qureshi@lw.com
william.baker@lw.com
michael.bern@lw.com
douglas.yatter@lw.com
benjamin.naftalis@lw.com
heather.waller@lw.com
melanie.blunschi@lw.com
Attorneys for Defendant Changpeng Zhao
s/Matthew Scarlato
Matthew Scarlato
14
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