Binance.US, the U.S. affiliate of global cryptocurrency exchange Binance, has argued against the Securities and Exchange Commission’s (SEC) move to freeze its funds, stating that it is a “draconian” action. In a motion filed on Monday, Binance.US claimed that the SEC’s Temporary Restraining Order remedies would effectively put an end to its business…
BAM Trading Services, the entity behind Binance.US, is predominantly owned by Binance founder Changpeng “CZ” Zhao. Through BAM Management US Holdings, according to the SEC. Last week, the SEC filed a lawsuit against Binance, Binance.US, and Zhao. Accusing them of operating an unregistered securities exchange, broker, and clearinghouse. The regulator alleged that Binance and Zhao were able to access Binance.US customers’ funds. Also, move millions to entities owned by Zhao.
Binance.US Amid Allegations
To safeguard the funds, the SEC requested a temporary restraining order. Freezing the assets until Binance.US could prove that no one at Binance, including Zhao, could access them. Binance and Binance US had previously denied the allegations but were required to submit a formal response by Monday.
In its filing, Binance.US argued that freezing its funds would primarily harm its customers, force the company out of business, and prevent it from defending itself in the litigation. The company claimed it would no longer be able to pay employees, and vendors, or maintain its technology. The filing also stated that the freeze could lead to other firms severing ties with Binance. US, potentially further impacting its operations.
Binance, Binance.US, and Zhao have enlisted legal counsel, including George Canellos. A former Department of Justice prosecutor and former co-director of the SEC Division of Enforcement. Binance US proposed an alternative stipulation to the court. Suggesting the repatriation of assets to BAM Trading’s control, with only Binance.US employees having access. The company also offered to transfer all funds to new wallets within two weeks.
The filing by Binance.US highlighted its opposition to the SEC lawsuit, questioning the absence of identified securities trading on its platform and stating that cryptocurrency is not automatically classified as a security. Binance.US further quoted SEC Chair Gary Gensler‘s remarks on the need for regulatory frameworks for cryptocurrencies to protect investors.
The U.S. District Court for the District of D.C. is set to hold a hearing on the motion on June 13. The outcome of the hearing will determine whether the SEC’s temporary restraining order will be granted or denied, and it will significantly impact the future of Binance. US’s business operations.
