Binance has launched in a filing a sudden counterstrike against the U.S. Securities and Exchange Commission (SEC). Binance.US, a subsidiary of Binance, has taken legal action, urging the court to reject the SEC’s proposed temporary restraining order on its assets. The exchange argues that this move by the regulator would bring its business to an “effective end.”
SEC/Binance Newsflash: Binance Fights Back
Binance, CZ and the BAM Defendants just filed lengthy opposition pleadings to the SEC's emergency action. Find the links to two important pleadings below, which will give you a good idea of their defenses.
Should be an extraordinary… pic.twitter.com/qc5GRwHmjn
— John Reed Stark (@JohnReedStark) June 12, 2023
Binance.US Challenges SEC’s Proposed Restraining Order
Binance.US, in a filing made on June 12, strongly criticized the SEC’s emergency motion for a temporary restraining order, labeling it as “draconian and unduly burdensome.” The hearing to decide the fate of this restraining order is scheduled for today, June 13, in the U.S. District Court for the District of Columbia.
The core argument put forth by Binance.US is that the restraining order would effectively cripple BAM Trading Services Inc., the entity responsible for providing crypto trading and exchange services for Binance.US. The American exchange expressed concerns that the requested relief would harm BAM’s customers, force BAM out of business, and prevent the company from mounting a strong defense in the ongoing litigation.
A noteworthy aspect of Binance.US’s response is a challenge to the SEC’s overall approach to pursuing legal action against the exchange. The filing asserts that the SEC’s claims fall flat because the regulator has failed to identify a single security traded on BAM’s platform.
The exchange contends that cryptocurrency should not automatically be considered a security, as evidenced by the fact that numerous cryptocurrency exchanges, including BAM, have operated in the United States for years without interference from the SEC.
Furthermore, Binance.US revealed that it has made substantial efforts to cooperate with the SEC’s investigation, which commenced on December 20, 2020. The exchange disclosed that it has provided over 700,000 individual communications and detailed operational data as part of the investigation.
SEC Files Emergency Motion for Binance Asset Freeze
The SEC launched a major legal action against Binance and its affiliates on June 5, accusing the exchange of failing to register as a securities exchange and enabling U.S. customers to trade cryptocurrencies that the SEC deems securities. The regulator also singled out the firm’s CEO Changpeng Zhao (CZ), alleging that he had access to Binance.US customer funds and transferred $12 billion in Binance’s funds through a privately controlled entity called Merit Peak.
The SEC intensified its actions on June 6 by filing an emergency motion for a temporary restraining order against the exchange, seeking to freeze assets held on Binance.US until it can prove that CZ or any other executive cannot move those funds. However, BAM calls for the court to deny the SEC’s motion, citing the lack of legal precedent and the SEC’s failure to meet the required legal standards.
Meanwhile, the clash of these titans in the courtroom and the outcome thereof will shape the future of Binance’s operations in the United States and potentially have broader implications for the cryptocurrency industry.