In the ongoing case between the United States Securities and Exchange Commission (SEC) and Binance.US, the exchange has yet again criticized SEC’s motion to freeze its assets. It has also requested the US court to deny the motion.
On Tuesday, Binance’s US branch asked the court to deny SECs proposed temporary restraining order against its assets, claiming that the move would “effectively end” its business. The exchange filed a petition to the court slamming the regulator and its motion for a temporary restraining order on its business, labeling it as “draconian and unduly burdensome.”
Notably, the hearing on the restraining order on the assets is scheduled to take place on Tuesday, June 13th in the US District Court for the District of Columbia. Prior which, Binance.US has argued that the restraining order would force the closure of BAM Trading Services Inc., the agency that provides crypto trading and exchange services for Binance.US. It stated:
The requested relief would primarily harm BAM’s customers, effectively put BAM out of business, and prevent BAM from defending itself in this litigation.
Further, the exchange took a jab at the regulator’s entire approach to pursuing legal action against it. It stated that “all of the SEC’s claims fail” because the regulator has not yet “identified a single security trading on BAM’s platform.” However, as of writing, the SEC has alleged that at least 68 crypto assets are securities including those listed on the exchange. The court filling from Binance.US noted:
The SEC suggests that it is a foregone conclusion that cryptocurrency is a security, but that is not the case. That numerous cryptocurrency exchanges, including BAM, have operated in the United States for years without interference by the SEC belies the claim that they are clearly covered by the securities laws.
Additionally, Binance.US said that it had made “significant efforts” to cooperate with an ongoing SEC investigation that began in December. According to the filing, the results of this investigation have yielded more than 700,000 individual communications and “bespoke data” on its day-to-day operations.
On June 5th, the SEC first launched major legal action against Binance and its affiliates, accusing the crypto exchange and failing to register as a securities exchange and for allowing U.S. customers to trade cryptocurrencies it claims are securities. The regulator also accused Binance CEO Changpeng Zhao (CZ) of being able to access Binance.US customer funds and alleged that he moved $12 billion in Binance’s funds through a privately-controlled entity called Merit Peak.
Then the following day i.e. on June 6th, the SEC filed an emergency motion for a temporary restraining order against Binance. The motion requested that assets held on Binance.US be frozen until the crypto exchange could prove that the funds were not able to be moved by CZ or any other executive at Binance.
While both Binance and Binance.US have repeatedly denied the SEC’s claims on social media over the course of the last week, a joint memorandum submitted alongside the filing marked the first official comment made regarding the accusations. It argued that the SEC is unable to “identify a single instance in which BAM customer assets were mishandled or misused.” It added:
Indeed, there is no ‘emergency’ here at all, other than the one manufactured by the SEC for its own purposes.
However, amid the ongoing feud, Binance.US has also delisted several BTC and BUSD advanced trading pairs. Then, the exchange on Friday announced it would temporarily halt all USD deposits and withdrawals. It posted an update on USD channels encouraging customers to withdraw their USD via bank transfer by June 13.
Notably, following all of this, the exchange has witnessed significant outflows even when compared to Coinbase, the other exchange which was hit by an enforcement action from the SEC last week. However, as the case grows, more information related to Binance will eventually uncover giving more clarity on its compliance standards and legitimacy.