The SEC has filed a sealed motion in the lawsuit against Binance, which went largely unnoticed on Tuesday with all the excitement around the SEC’s defeat against Grayscale. Meanwhile, filing a court document “under seal” is admittedly a very uncommon step for this regulation agency (given its civil, not a criminal, nature), allowing sensitive or confidential information to be filed with a court while kept off of any public record. So, what may this mean for Binance?

Two of the few strategic reasons that the SEC might prefer to file court documents under seal, according to the insightful thread from Reed Stark, former Chief of SEC Internet Enforcement, are when the filing could somehow:

  • Interfere with or reveal secret details about a criminal investigation conducted by the U.S. Department of Justice or
  • Place a witness or company at risk (which typically involves redactions rather than full court sealing).

Stark’s best guess, as well as Adam Cochran’s in the thread above, is:

“The secret SEC filing likely relates to an existing U.S. SEC filing likely relates to an existing U.S. DOJ investigation of Binance and could, directly or indirectly, describe the heretofore unknown contents of an impending U.S. DOJ Binance-related indictment or an indictment already filed under seal — which the U.S. DOJ would prefer to keep secret.”

Under any circumstances, this application’s odd and uncommon nature cannot be overstated. In Stark’s almost 20 years in the SEC’s Enforcement Division, he “can’t recall ever filing a motion or any other court document under seal” and recommends “to get the popcorn.”

In his turn, Adam Cochran points out that this aligns with Binance’s commentary about exiting the Russian market in the past week, “which is odd timing.”

“Unsure how Binance fares in the end, but I’m like 90% sure CZ’s goose is cooked,” – says Cochran.

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