Binance.US urged a federal judge to reject a Securities and Exchange Commission request to freeze billions of dollars of assets on the cryptocurrency exchange during a legal fight with the regulator, arguing the move would cripple its business and hurt customers.
(Bloomberg) — Binance.US urged a federal judge to reject a Securities and Exchange Commission request to freeze billions of dollars of assets on the cryptocurrency exchange during a legal fight with the regulator, arguing the move would cripple its business and hurt customers.
“Operations would quickly grind to a halt” without the ability to pay employees, vendors, suppliers and professionals or to maintain the trading platform, Binance.US attorneys said Monday in a court filing. “With a freeze of all corporate assets, banking partners would most likely cease to honor requests to transfer funds for any purpose, including customer redemptions.”
The SEC sought the asset freeze after suing Binance.US, Binance Holdings Ltd. and founder Changpeng Zhao last week, alleging “blatant disregard of US securities laws” and “years of violative conduct” that puts customer funds at risk. Binance.US is also owned by Zhao.
Defense attorneys argued in their court filing that US customer assets are safe and said “there is no need for the draconian relief sought by the SEC.”
According to the June 5 lawsuit, the violations included mishandling customer funds and misleading investors and regulators. The SEC filed an emergency action application for a temporary restraining order to freeze Binance.US’s assets in an attempt to protect customer funds, including through repatriation of client investments held abroad. Binance has disputed the allegations.
Since the lawsuit, one of the exchange’s banking partners already informed Binance.US it will no longer hold its assets starting on June 14, according to the filing. The same partner froze all activity on the company’s account until after the court rules on the SEC’s motion.
The filing comes ahead of hearing on the issue Tuesday before Judge Amy Berman Jackson in Washington federal court.
The case is SEC v. Binance, 23-cv-01599, US District Court, District of Columbia (Washington, DC).
–With assistance from Austin Weinstein.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.