SEC seeks freeze on Binance.US assets amid claims
In a bold regulatory move, the U.S. Securities and Exchange Commission (SEC) has initiated steps to freeze the assets of Binance.US amid allegations of securities law violations.
On 5th June, the SEC took legal action against Binance, its CEO Changpeng Zhao (widely known as CZ), and Binance.US for perceived violations of securities legislation in the United States. The SEC additionally accused Binance.US of mixing clients' capital with a business entity under CZ's control. As part of the same litigation, the watchdog named ten cryptocurrencies, including Solana and Cardano, as securities.
The significant point in the submitted document suggested that a restraining order is necessary to freeze the exchange's assets with the goal of "preserving the status quo, preventing dissipation or transfer" of the capital to another jurisdiction. This step would also uphold the court's capacity to "award relief in the form of disgorgement, prejudgement interest, and civil penalties."
The filing stipulated:
"Defendants BAM Management and BAM Trading and their agents, servants, employees, attorneys-in-fact, and those persons in active concert (…) shall hold and retain within their control, and otherwise prevent any disposition, transfer, pledge, encumbrance, assignment, dissipation, concealment, or other disposal whatsoever of any of their funds or other assets or things of value (…)"
The document also underscored that client funds must solely be under the control of BAM Trading within five days following court approval. The SEC's primary aim is to revoke Binance and its CEO, Zhao's capacity or involvement in the transfer or withdrawal of U.S. customer resources. The filing went on to state:
"Ensure that neither Defendant Binance, nor Defendant Zhao, nor any of the Binance Entities obtains possession, custody, or control over Customer Assets, including by being designated as an account holder or signatory of any account or wallet holding Customer Assets without first obtaining leave of the Court"
In addition, the submission petitions Binance.US to redirect all crypto assets to a distinct wallet with fresh private and administration keys. It also posits that these novel details must not be handed over to Binance, CZ, or related bodies. This measure should be finalized within 30 days from the court's issuance of the restraining order.
Upon sanctioning, the CEO and CFO would need to provide written approval for any transfers exceeding $100,000. Furthermore, Binance.US might be permitted to relocate its staking service to either BitGo or Aegis, conditional on meeting the SEC's requirements.
Binance.US responded to the SEC's allegations by way of a Twitter post, declaring the preliminary injunction filing as unwarranted. The American subsidiary of the crypto exchange voiced its disillusionment regarding the predicament.
CZ, augmenting Binance.US's stance, leveraged his Twitter account to elucidate that the SEC's actions are targeted solely at Binance.US and not its parent site, Binance.com. He further allayed community fears, asserting the security of their investments.Advertisement