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SEC files emergency restraining order to freeze assets of Binance US, Binance responds: Disregarding user asset security

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SEC files emergency restraining order to freeze assets of Binance US, Binance responds: Disregarding user asset security

The SEC has requested to freeze assets under the Binance.US platform, with the emphasis that the SEC hopes the court will allow Binance.US users to continue withdrawals and has no intention to freeze assets belonging to users. Binance.US emphasizes that the platform is operating normally, deposits and withdrawals are functioning as usual. Binance founder Zhao Changpeng CZ stresses that users on the main Binance platform will not be affected.

SEC Accuses Binance's US Affiliate of Purchasing a Yacht

The U.S. Securities and Exchange Commission (SEC) filed multiple securities law violation charges on June 5 against Binance Holdings Limited, its U.S. affiliate BAM Trading Services Inc. (BAM Trading), and founder Changpeng Zhao.

A segment in the complaint read:

BAM CEO B's concerns were justified, as market makers Merit Peak, accounts under Sigma Chain, BAM, and Binance were involved in transactions totaling hundreds of billions of dollars. For example, as of 2021, at least $145 million was transferred from BAM to a Sigma Chain account, an additional $45 million was moved from BAM's B account to Sigma Chain, and Sigma Chain used funds from this account to purchase a yacht for $11 million.

SEC seems to argue that this is no different from FTX misusing customer assets and further requested freezing of assets belonging to Binance's U.S. arm.

SEC Lists Multiple Reasons

According to legal documents, SEC listed several reasons for freezing assets of Binance's U.S. arm:

  • Prevent defendants from selling, altering, or hiding relevant records.

  • Request defendants to declare they will provide detailed accounts.

  • Accelerate the evidence-gathering process.

  • Protect investors.

SEC pointed out:

Given the defendants' years of illegal activities, including ignoring U.S. laws, evading regulations, publicly engaging in various fund transfers, and controlling user assets, SEC implored for the enforcement of a temporary restraining order to swiftly ensure user asset safety and prevent any potential asset depletion.

Binance.US: SEC Neglects User Asset Safety

Binance.US tweeted that user assets are safe and the platform will operate as usual with normal deposit and withdrawal functions. It criticized SEC's requested injunction as baseless, solely attempting to gain an advantage in the lawsuit rather than caring about user asset safety. It stated:

Although Binance.US has provided information to SEC to ensure user asset safety, SEC still moved for a motion seeking a temporary restraining order and preliminary injunction. We are disappointed by this.

In fact, the temporary restraining order by SEC explicitly allows for continued withdrawal by Binance.US users, as mentioned in the tweet by Binance.US. Binance founder Changpeng Zhao CZ emphasized that users on the main Binance platform will not be affected.

The injunction submitted by SEC requests Binance.US to provide accurate accounting information. If approved by the court, this would be the first complete and public accounting report for a business under the Binance umbrella.