Latest crypto news regarding the lawsuit between the SEC and Binance: Binance and Binance.US have filed suit against the SEC’s motion to freeze all of Binance.US’s funds, and other news.
Below are all the details.
Summary
The crypto exchange Binance in court against the SEC
Binance, Binance.US and Changpeng “CZ” Zhao have released their initial responses to the SEC‘s lawsuit against them, and if taken literally, the stakes appear to be incredibly high.
However, only afterwards may we have a better understanding of the progress of the case and the court’s view of the arguments presented so far.
On a related note, they are currently in Washington to provide coverage of the SEC hearing against Binance on a temporary restraining order.
Specifically, on Monday, Binance.US and Binance filed their initial responses to the US Securities and Exchange Commission (SEC), claiming that the regulator’s pressure for a temporary restraining order would prevent them from remunerating employees, suppliers and other stakeholders.
In addition, the documents anticipated their defense against the actual charges brought by the SEC.
Binance.US provided a strongly worded response to the restraining order motion filed by the SEC, stating that this could result in the closure of their operations if it is granted.
“The SEC seeks unnecessary and unwarranted relief. Far from calling for relief that is ‘finely calibrated’ to ‘maintain the status quo’… ‘draconian’ restraining order.”
Amid all this, US District Judge Amy Berman Jackson of the DC District Court issued an order requiring Binance and Binance.US to outline any differences in the proposed clauses by 1 PM ET (17:00 UTC), one hour before the start of the hearing.
He also ordered the SEC to describe the changes it wishes to make to Binance.US’s proposal so that it may be acceptable to the agency as an alternative to the proposed temporary restraining order.
The judge specified that, at this time, neither party can present any further arguments or explanations.
The two entities engaged in search for compromise?
The US Securities and Exchange Commission (SEC) and BAM Trading, the US arm of Binance, recently filed a petition for a consent order that would modify some of the restrictions of an earlier SEC request to block the company’s assets.
Specifically, the proposed new consent order aims to provide additional safeguards to the SEC and would allow BAM Trading to meet financial obligations, including employee payments and other commitments. As the document states:
“BAM Trading and BAM Management may continue to make payments for the purchase of goods and services, salaries for BAM Trading and BAM Management staff, including pre-existing benefits, professional fees and other similar ordinary expenses for the operation of their businesses.”
The main clause to allow the release of assets provides that Binance may not make payments or transfer assets to entities or individuals acting on behalf of Binance under any circumstances.
In addition, the order states that the CEO of Binance, Changpeng Zhao, cannot access the assets of BAM Trading or Binance.US.
After the legal action taken by the SEC against Binance and Zhao, the commission filed an urgent request to freeze the assets of BAM Trading.
In response, BAM Trading filed a motion in opposition, arguing that the SEC’s rationale for requesting the freeze does not meet the burden of proof required by the court.
At this time, the court has not yet approved the proposed consent order. Thus, there seems to be a disagreement between the SEC and Binance on the details, and the court has requested further clarification.
Binance’s attack on SEC: “the assault is on the crypto industry”
In a joint document filed in support of the Binance.US filing, Binance Holdings and Zhao stated that “there is no risk to the assets of Binance.US customers” and argued that no emergency action is necessary.
This filing, which was also released Monday, claimed that the SEC has allowed Binance and Binance.US to operate since their launch without taking prior enforcement action.
“Why did the SEC allow these platforms to grow to their current size if it was always illegal? And how could the sudden ’emergence’ coincide with the SEC’s assault on the cryptocurrency industry as a whole, with Binance and Coinbase being sued on consecutive days?”
In addition, the filing stated that the SEC had not previously raised any concerns about Binance.US’s assets or the access of Zhao and Binance.
In fact, it was pointed out that the first time any concern was raised was on 30 May 2023, which was a few days before the subpoena was issued.
Not only that, the filing stated that the SEC’s allegations concern registration violations and control person issues, not misuse of funds.
Binance also disputed the SEC’s allegations regarding its classification as a clearing agency or exchange, arguing that it does not directly operate Binance.US, but acts as a service provider for the US cryptocurrency trading platform.
