Binance lawyers dispute SEC’s claim that Binance.US customers’ assets are in danger.
Lawyers for Binance.US and its CEO Changpeng Zhao argued against the US Securities and Exchange Commission’s (SEC) request to freeze their assets, claiming that there is no risk to customer assets. This was stated in a court filing on Monday, ahead of a Tuesday hearing to discuss the SEC’s proposed restraining order. The lawyers also argued that the alleged securities law violations have been public and open for years, and that the SEC manufactured an emergency for its own purposes. They further stated that granting the SEC’s requested relief would harm BAM customers and effectively end BAM’s business. BAM Trading Services Inc. and BAM Management US Holdings Inc. operate Binance.US.
Last week, the SEC filed 13 charges against Binance and Zhao for their blatant disregard of the federal securities laws. A day later, the agency filed an emergency motion seeking a temporary restraining order in the US District Court for the District Court of Columbia, asking a judge to freeze assets of BAM Trading and BAM Management, in part to ensure the safety of customer assets.
Behind the curtain between the SEC and Binance
The lawyers for Binance and Zhao stated that they only learned that they were potentially targets of an SEC investigation involving Binance.US in late February 2023. However, the SEC never expressed concern about the safety and security of Binance.US’s user assets, despite frequent interaction over the course of the next three months. The SEC’s position only shifted on May 30, 2023, when they suggested for the first time that they had significant questions and concerns about the safety of customer assets and the unencumbered availability of funds at BAM Trading. Communications between the SEC and Binance continued up to June 2, and the agency filed the lawsuit days later on June 5.