‘All of the SEC’s claims fail’ — Binance.US rebuts motion to freeze funds

Binance.US has requested the court to reject the temporary restraining order that the securities regulator has proposed to be imposed on its assets prior to the June 13 hearing, arguing that the action would “terminate” its operations.

In a June 12 filing, Binance.US strongly criticized the SEC’s emergency motion for a temporary restraining order on its business, describing it as “draconian and excessively burdensome.”

The U.S. District Court for the District of Columbia has set June 13 as the date for the hearing on the temporary restraining order.

Binance.US argued that the restraining order would essentially cause BAM Trading Services Inc., the entity that provides crypto trading and exchange services for Binance.US, to cease operations, saying:

Notably, Binance.US contested the SEC’s entire approach to taking legal action against it, asserting that “all of the SEC’s claims lack substance” since the regulator has not yet “specified a single security trading on BAM’s platform.” As of now, the SEC has alleged that at least 68 digital assets are securities.

The filing states that, despite the SEC’s assertion that cryptocurrency is a security as a matter of course, that is not the case. It goes on to point out that many cryptocurrency exchanges, such as BAM, have been operating in the United States for a number of years without any interference from the SEC, which contradicts the suggestion that they are subject to the securities laws.

Moreover, Binance.US declared that it had put in substantial efforts to collaborate with an ongoing SEC inquiry that commenced on December 20th, 2020. As indicated by the filing, the outcomes of this investigation have produced more than 700,000 individual correspondences and “customized data” on its everyday activities.

On June 5, the SEC initiated a major lawsuit against Binance and its subsidiaries, accusing the crypto exchange of not registering as a securities exchange and permitting U.S. customers to trade digital assets that it alleges are securities.

Furthermore, the regulator charged Changpeng Zhao (CZ), the CEO of Binance, with having the capacity to access the funds of Binance.US customers, and that he had relocated $12 billion in Binance’s funds through a privately-controlled organization called Merit Peak.

The following day, June 6, the SEC submitted an urgent petition for a provisional restraining order against Binance, requesting that the resources held on Binance.US be frozen until the digital currency exchange could demonstrate that the assets could not be moved by CZ or any other executive at Binance.

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Despite Binance and Binance.US denying the SEC’s claims on social media in the past week, their joint memorandum submitted alongside the filing was the first official response to the allegations.

The argument was that the SEC could not find a single example of BAM customer assets being mishandled or misused.

The memorandum further stated that, in reality, no emergency exists here, other than the one created by the SEC for its own objectives.

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