SEC Seeks Freeze of Binance.US Assets

Federal regulators want a judge to freeze the assets of Binance.US and repatriate funds to the crypto exchange’s customers.

The request by the Securities and Exchange Commission (SEC), filed in U.S. District Court Tuesday (June 6), came one day after the agency charged Binance.US’s parent company Binance and founder Changpeng Zhao with a series of offenses.

“The SEC respectfully submits that this relief is necessary … given the Defendants’ years of violative conduct, disregard of the laws of the United States, evasion of regulatory oversight, and open questions about various financial transfers and the custody and control of Customer Assets,” the agency said in Tuesday’s filing.

The SEC said in a news release that it was seeking other emergency relief against Binance Holdings Limited, BAM Trading Services Inc., BAM Management US Holdings, Inc., and Zhao, to make sure that Binance.US customers’ assets are protected and stay in the U.S. through the conclusion of the agency’s litigation.

In a statement posted to Twitter Tuesday evening, Binance.US said customer assets were safe and called the SEC’s filing “unwarranted,” born out of a wish to get leverage in the legal case instead of concern about user funds.

“Until recently — despite years of engagement — the SEC Staff has not expressed a concern about the safety of customer assets,” the company said. “And through near around-the-clock dialogue over the past week, company’s counsel addressed SEC Staff’s concerns regarding the safety of customer assets.”

The SEC on Monday (June 5) accused Binance, the world’s largest cryptocurrency platform, of a number of charges, part of broader crackdown on the digital asset sector.

“Through 13 charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law,” SEC Chair Gary Gensler said in a news release.

Biannce has said it was “disapointed” with the SEC’s actions, arguing it has tried to work with the regulator and reach a negotiated settlement.

“While we take the SEC’s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis,” the company said in a post on its blog. “We intend to defend our platform vigorously.”

Less than 24 hours after filing its charges against Binance, the SEC sued crypto platform Coinbase, alleging the company let its users trade unregistered securities. Coinbase has countered that the SEC is using an “enforcement-only approach in the absence of clear rules for the digital asset industry.”

“Unfortunately for crypto firms looking to operate in the U.S., the long-standing argument that cryptocurrencies and digital assets should not be viewed as securities under federal laws continues to largely fall on deaf ears at the SEC — and may soon be clarified in court,” PYMNTS wrote Tuesday.