In a sudden move, the United States Securities and Exchange Commission (SEC), has decided to pace up in the ongoing regulatory feud with Binance. The regulator has filed an emergency motion in Washington D.C. federal court seeking to freeze the assets of Binance’s US division.
Further, the motion also aims to repatriate both fiat currency and crypto held by the service’s customers. Notably, the SEC’s freezing order only applies to Binance’s two U.S. holding companies, not to the non-U.S. regulated international exchange.
However, the order would apply to dozens of accounts held at Axos Bank, the defunct Silvergate Bank, Prime Trust, and other institutions. The SEC has alleged that two foreign entities under the control of Changpeng Zhao (CZ), the founder of Binance, were used to execute ill practices.
The regulator stated the agencies namely – Sigma Chain and Merit Peak, served as conduits for billions of dollars of customer money that was improperly commingled with Binance’s funds. It added that the emergency restraining order is necessary to “prevent the dissipation of available assets for any judgment, given the defendants’ years of violative conduct, disregard of the laws of the United States.” Following is an excerpt from the motion filed by the SEC.
Additionally, the order also wants Zhao to “show cause why a preliminary injunction” against him and his two holding companies “should not be entered.” Reportedly, the restraining order would also prevent all three entities from destroying evidence.
As the SEC’s motion induced some panic among investors, Binance.US took to Twitter to target the regulator. In the tweet, the firm stated that “user assets remain safe and secure” and added the platform “continues to be fully operational with deposits and withdrawals functioning as normal.”
Further, it called the motion “unwarranted,” and that it was filed to gain an advantage in litigation after the exchange spent the past week in dialogue with the SEC. It also stated its disappointment but willingness to go to court to clear its name. Binance.US stated:
Despite the information, the company has provided to ensure SEC Staff of the safety of customer assets, the Staff has nonetheless decided to file the motion seeking a temporary restraining order and preliminary injunction. While we are disappointed by this action, we look forward to defending ourselves in court.
On Monday, the SEC filed a lawsuit against Binance According to reports, the SEC has filed 13 charges against the exchange, including unregistered offers and sales of the stablecoins – BNB and BUSD, its services namely the Simple Earn and BNB vault products, and its staking program. Additionally, the regulator claims in its suit that Binance failed to register its online platform as an exchange or a broker-dealer clearing agency.
As it seems, the regulatory war for Binance.US is a long run considering the two primary US regulators are behind it. Besides the SEC, the Commodity Futures Trading Commission (CFTC) also filed a lawsuit against Binance for selling unregistered commodities. Interestingly, both regulators have counted on stablecoins like BUSD under their respective jurisdictions. This makes the need for clarity in crypto regulation crystal clear.
Simultaneously, Gary Gensler, SEC chief, has been rigid about his classification of crypto assets and securities and the existing securities laws sufficiency to regulate them. However, lawmakers and industry participants have often flagged this behavior and have anticipated it to drive innovation away.
Additionally, recent data supporting such anticipations have already resurfaced as the Bitcoin supply surges in Asia whereas it declines in the US as reported by Todayq News. Moreover, JP Morgan in its report last month explicitly stated that the hostile U.S. regulatory environment is pushing American crypto firms to look for opportunities overseas. The research report contains examples of crypto firms and their plans as the regulators intensified their actions.