Page 1 Declaration of Matthew Beville
Ex. 3Page 2 EXHIBIT 15Page 3 From:
To:
Cc:
Subject:
Date:
Farer, Jennifer
Murphy, J. Emmett; Martens, Matthew T.; Beville, Matthew; gcanellos@milbank.com; McLucas, William;
mlaroche@milbank.com; Adler, Jeremy
Smith, Tiffany; Scarlato, Matthew; Tenreiro, Jorge
RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
Friday, August 11, 2023 6:52:37 PM
Counsel,
As referenced in the email below, there continue to be a number of outstanding discovery
issues that remain unresolved. For the past almost two months, we have endeavored to engage
with you in good faith to resolve some of these issues. We continue to disagree with your
objections to the various discovery requests as set forth most recently in your July 31 letter,
and there were numerous issues as to scope, substance, timing, and format with respect to the
minimal discovery that you have provided. Simply put, BAM has not complied with its
discovery obligations under the Consent Order and Federal Rules. We have attempted in good
faith to resolve these issues absent court intervention, but at this point, we appear to be at an
impasse, such that court resolution is necessary.
Before doing so, we are following up on the outstanding items below that you agreed to
provide after our calls last week regarding your July 31 letter, but that we have not yet
received. Please let us know by close of business on Monday when you expect to produce the
following items, or that you no longer plan to produce them as discussed, so we can accurately
reflect your position in any filing with the court:
1. Supplementation of verified interrogatory responses with information set forth in written
attorney correspondence.
2. Bank account documents. We have not yet received any documents identifying the
account owners, signatories, and other authorized personnel who control the accounts or
can direct transfers or withdrawals. We also have asked for reproduction of screenshots
that are unintelligible, although we maintain our position that these screenshots do not
satisfy your discovery obligations.
3. Dates of all individuals’ possession, custody, or control of any Private and
Administrative Keys or New Private and Administrative Keys.
4. Information for new wallets created under the Consent Order, including the date created,
addresses, specific crypto assets held in each wallet, and holders of the New Private and
Administrative Keys.
5. General ledgers and company month-end financials for the time period December
to at least June 30, 2023.
6. Audit/accounting records. After repeated back and forth, during our August 3 call, you
agreed you would review and provide certain audit and accounting records. Please let
us know what more you are willing to provide in addition to the information in no. above.
7. Ceffu and wallet custody information
a. Information concerning the infrastructure, systems, and software involved in
wallet creation and custody, control, and management of crypto assets to include:
i. Identification of the components of the infrastructure, systems, and
software involved in wallet creation and management and ongoing
CLASS="hdiv">Page 4 custody and control of the crypto assets;
ii. Explanation of the interrelationship of these components and how the
wallet software operates;
iii. The lifecycle of creation, delivery, management, and operation of the
wallets and corresponding keys and the lifecycle of requests to key
holders for approval of transactions, transfers, and withdrawals,
including how the software operates and establishes wallets/keys; all
individuals and companies involved in the operation of the
software/keys; the process by which the keys are provided to key
holders and how they operate; and functionality, technical
specifications, network diagram information; and
iv. Information about Ceffu, its relationship with BAM, and role with
respect to Binance.US and company and Customer Assets, including
agreements and communications regarding the relationship and
individuals involved in performing such services on the part of
Ceffu/BHL.
b. Information about the Wallet Custody Agreement and performance of the roles,
responsibilities, and functions set forth in the agreement from September 2019 to
the present, including:
i. Role(s) and involvement of BHL;
ii. Detailed chronology with back-up documentation about the evolution
of the relationship and roles and responsibilities of BHL over time;
iii. Explanation for Defendants’ position that the Wallet Custody
Agreement was “not operationalized” and did not describe or govern the
relationship between BAM and BHL with respect to Binance.US
wallets and custody and control of crypto assets or fiat;
iv. Identification of individuals and entities that performed the roles,
responsibilities, and functions set forth in the Wallet Custody
Agreement and identification of the governing agreement if not the
Wallet Custody Agreement.
1. As discussed, setting aside your position on the Wallet Custody
Agreement, the roles, responsibilities, and functions set out in the
Wallet Custody Agreement were being performed for Binance.US.
We have asked you to provide information on who had such roles and
were performing such services whether or not the Wallet Custody
Agreement governed the relationship.
Following our discussion in which you agreed to provide this Ceffu and wallet custody
information, we followed up with an email on August 5 requesting specific documents
and information that tie to the categories of information you agreed to provide. Please
let us know if you agree to produce such documents and information.
8. Report identifying all of the keys authorized in the pool for each wallet, and
identification of devices by IMEI #. This information should include an explanation of
how this report was created.
9. Explanation of the difference between the wallets listed on documents produced at
BAM_SEC_LIT_000000072 and BAM_SEC_LIT_000000093 (i.e., certain networks
identified on BAM_SEC_LIT_000000072 were not listed on
BAM_SEC_LIT_000000093) and what processes apply to the wallets listed on
-00000072 as described in your Response to Interrogatory No. 7.
10. Confirmation or correction of the dates set forth in your July 10 production under
Section IV of the Consent Order. Most of the information provided was as of June 30,
2023, but BAM_SEC_LIT_00000090 is as of June 20, 2023. If the dates are correct,Page 5 please update BAM_SEC_LIT_00000090 with information as of June 30, 2023, so we
can reconcile the information produced.
Finally, as discussed, discovery is to be produced as it is maintained in the ordinary course of
business and consistent with our data delivery standards. Please let us know when we can
expect a reproduction of discovery to date or if you are not willing to reproduce.
As we’ve indicated, given the insufficiency of discovery productions in terms of scope,
timing, and format, we believe an extension of the expedited discovery time period is
necessary and intend to request a 60-day extension. You previously stated that you do not
believe such an extension is warranted. If your position has changed or you would like to
discuss further, please let us know. Otherwise, we will note your opposition to our request in
any filing with the Court.
Thank you.
Jennifer L. Farer
U.S. Securities and Exchange Commission
100 F Street N.E. | Washington, D.C. From: Murphy, J. Emmett
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)
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. Rule 30(b)(6) of BAM Trading Inc. (notice with topics will follow)
2. Erik KelloggPage 6 4. Brian Shroder
5. Jasmine Lee
6. 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.
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 openPage 7 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
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, JeremyPage 8Page 9 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,
by 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
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 forthPage 10 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
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,Page 11 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)
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 mayPage 12 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
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Declaration of Matthew Beville
Ex. 3
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EXHIBIT 15
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From:
To:
Cc:
Subject:
Date:
Farer, Jennifer
Murphy, J. Emmett; Martens, Matthew T.; Beville, Matthew; gcanellos@milbank.com; McLucas, William;
mlaroche@milbank.com; Adler, Jeremy
Smith, Tiffany; Scarlato, Matthew; Tenreiro, Jorge
RE: SEC v. Binance Holdings Ltd., et al. (1:23-cv-01599)
Friday, August 11, 2023 6:52:37 PM
Counsel,
As referenced in the email below, there continue to be a number of outstanding discovery
issues that remain unresolved. For the past almost two months, we have endeavored to engage
with you in good faith to resolve some of these issues. We continue to disagree with your
objections to the various discovery requests as set forth most recently in your July 31 letter,
and there were numerous issues as to scope, substance, timing, and format with respect to the
minimal discovery that you have provided. Simply put, BAM has not complied with its
discovery obligations under the Consent Order and Federal Rules. We have attempted in good
faith to resolve these issues absent court intervention, but at this point, we appear to be at an
impasse, such that court resolution is necessary.
Before doing so, we are following up on the outstanding items below that you agreed to
provide after our calls last week regarding your July 31 letter, but that we have not yet
received. Please let us know by close of business on Monday when you expect to produce the
following items, or that you no longer plan to produce them as discussed, so we can accurately
reflect your position in any filing with the court:
1. Supplementation of verified interrogatory responses with information set forth in written
attorney correspondence.
2. Bank account documents. We have not yet received any documents identifying the
account owners, signatories, and other authorized personnel who control the accounts or
can direct transfers or withdrawals. We also have asked for reproduction of screenshots
that are unintelligible, although we maintain our position that these screenshots do not
satisfy your discovery obligations.
3. Dates of all individuals’ possession, custody, or control of any Private and
Administrative Keys or New Private and Administrative Keys.
4. Information for new wallets created under the Consent Order, including the date created,
addresses, specific crypto assets held in each wallet, and holders of the New Private and
Administrative Keys.
5. General ledgers and company month-end financials for the time period December 2022
to at least June 30, 2023.
6. Audit/accounting records. After repeated back and forth, during our August 3 call, you
agreed you would review and provide certain audit and accounting records. Please let
us know what more you are willing to provide in addition to the information in no. 5
above.
7. Ceffu and wallet custody information
a. Information concerning the infrastructure, systems, and software involved in
wallet creation and custody, control, and management of crypto assets to include:
i. Identification of the components of the infrastructure, systems, and
software involved in wallet creation and management and ongoing
PDF Page 5
Case 1:23-cv-01599-ABJ-ZMF Document 141-2 Filed 10/03/23 Page 4 of 12
custody and control of the crypto assets;
ii. Explanation of the interrelationship of these components and how the
wallet software operates;
iii. The lifecycle of creation, delivery, management, and operation of the
wallets and corresponding keys and the lifecycle of requests to key
holders for approval of transactions, transfers, and withdrawals,
including how the software operates and establishes wallets/keys; all
individuals and companies involved in the operation of the
software/keys; the process by which the keys are provided to key
holders and how they operate; and functionality, technical
specifications, network diagram information; and
iv. Information about Ceffu, its relationship with BAM, and role with
respect to Binance.US and company and Customer Assets, including
agreements and communications regarding the relationship and
individuals involved in performing such services on the part of
Ceffu/BHL.
b. Information about the Wallet Custody Agreement and performance of the roles,
responsibilities, and functions set forth in the agreement from September 2019 to
the present, including:
i. Role(s) and involvement of BHL;
ii. Detailed chronology with back-up documentation about the evolution
of the relationship and roles and responsibilities of BHL over time;
iii. Explanation for Defendants’ position that the Wallet Custody
Agreement was “not operationalized” and did not describe or govern the
relationship between BAM and BHL with respect to Binance.US
wallets and custody and control of crypto assets or fiat;
iv. Identification of individuals and entities that performed the roles,
responsibilities, and functions set forth in the Wallet Custody
Agreement and identification of the governing agreement if not the
Wallet Custody Agreement.
1. As discussed, setting aside your position on the Wallet Custody
Agreement, the roles, responsibilities, and functions set out in the
Wallet Custody Agreement were being performed for Binance.US.
We have asked you to provide information on who had such roles and
were performing such services whether or not the Wallet Custody
Agreement governed the relationship.
Following our discussion in which you agreed to provide this Ceffu and wallet custody
information, we followed up with an email on August 5 requesting specific documents
and information that tie to the categories of information you agreed to provide. Please
let us know if you agree to produce such documents and information.
8. Report identifying all of the keys authorized in the pool for each wallet, and
identification of devices by IMEI #. This information should include an explanation of
how this report was created.
9. Explanation of the difference between the wallets listed on documents produced at
BAM_SEC_LIT_000000072 and BAM_SEC_LIT_000000093 (i.e., certain networks
identified on BAM_SEC_LIT_000000072 were not listed on
BAM_SEC_LIT_000000093) and what processes apply to the wallets listed on
-00000072 as described in your Response to Interrogatory No. 7.
10. Confirmation or correction of the dates set forth in your July 10 production under
Section IV of the Consent Order. Most of the information provided was as of June 30,
2023, but BAM_SEC_LIT_00000090 is as of June 20, 2023. If the dates are correct,
PDF Page 6
Case 1:23-cv-01599-ABJ-ZMF Document 141-2 Filed 10/03/23 Page 5 of 12
please update BAM_SEC_LIT_00000090 with information as of June 30, 2023, so we
can reconcile the information produced.
Finally, as discussed, discovery is to be produced as it is maintained in the ordinary course of
business and consistent with our data delivery standards. Please let us know when we can
expect a reproduction of discovery to date or if you are not willing to reproduce.
As we’ve indicated, given the insufficiency of discovery productions in terms of scope,
timing, and format, we believe an extension of the expedited discovery time period is
necessary and intend to request a 60-day extension. You previously stated that you do not
believe such an extension is warranted. If your position has changed or you would like to
discuss further, please let us know. Otherwise, we will note your opposition to our request in
any filing with the Court.
Thank you.
Jennifer L. Farer
U.S. Securities and Exchange Commission
100 F Street N.E. | Washington, D.C. 20549
From: Murphy, J. Emmett
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)
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. Rule 30(b)(6) of BAM Trading Inc. (notice with topics will follow)
2. Erik Kellogg
PDF Page 7
Case 1:23-cv-01599-ABJ-ZMF Document 141-2 Filed 10/03/23 Page 6 of 12
3
4. Brian Shroder
5. Jasmine Lee
6. 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.
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
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Case 1:23-cv-01599-ABJ-ZMF Document 141-2 Filed 10/03/23 Page 7 of 12
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
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
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Case 1:23-cv-01599-ABJ-ZMF Document 141-2 Filed 10/03/23 Page 9 of 12
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,
by 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
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
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Case 1:23-cv-01599-ABJ-ZMF Document 141-2 Filed 10/03/23 Page 10 of 12
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
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,
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Case 1:23-cv-01599-ABJ-ZMF Document 141-2 Filed 10/03/23 Page 11 of 12
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)
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
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Case 1:23-cv-01599-ABJ-ZMF Document 141-2 Filed 10/03/23 Page 12 of 12
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
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