Binance.US has lodged its defense ahead of tomorrow’s hearing on whether it’s funds will be frozen.
Binance.US has asked the court to deny the securities regulator’s proposed temporary restraining order against its assets ahead of a June 13 hearing, claiming that the move would “effectively end” its business.
In a June 12 filing, Binance.US slammed the SEC’s emergency motion for a temporary restraining order on its business, calling it “draconian and unduly burdensome.”
The hearing on the temporary restraining order is scheduled for June 13 in the U.S. District Court for the District of Columbia.
SEC/Binance Newsflash: Binance Fights Back
Binance, CZ and the BAM Defendants just filed lengthy opposition pleadings to the SEC's emergency action. Find the links to two important pleadings below, which will give you a good idea of their defenses.
Should be an extraordinary… pic.twitter.com/qc5GRwHmjn
— John Reed Stark (@JohnReedStark) June 12, 2023
Binance.US argued that the restraining order will effectively put BAM Trading Services Inc., the entity that provides crypto trading and exchange services for Binance.US, out of business, stating:
“The requested relief would primarily harm BAM’s customers, effectively put BAM out of business, and prevent BAM from defending itself in this litigation.”
Notably, Binance.US took aim at the regulator’s entire approach to pursuing legal action against it, asserting that “all of the SEC’s claims fail” because the regulator has not yet “identified a single security trading on BAM’s platform.” At the time of publication, the SEC has alleged that at least 68 cryptocurrencies are securities.
“The SEC suggests that it is a foregone conclusion that cryptocurrency is a security, but that is not the case. That numerous cryptocurrency exchanges, including BAM, have operated in the United States for years without interference by the SEC belies the claim that they are clearly covered by the securities laws,” wrote the filing.
Furthermore, Binance.US said that it had made “significant efforts” to cooperate with an ongoing SEC investigation that began on Dec. 20, 2020. According to the filing, the results of this investigation have yielded more than 700,000 individual communications and “bespoke data” on its day-to-day operations.
Today we charged Binance Holdings Ltd. (Binance); U.S.-based affiliate, BAM Trading Services Inc., which, together with Binance, operates https://t.co/swcxioZKVP; and their founder, Changpeng Zhao, with a variety of securities law violations.https://t.co/H1wgGgR5ir pic.twitter.com/IWTb7Et86H
— U.S. Securities and Exchange Commission (@SECGov) June 5, 2023
The SEC first launched major legal action against Binance and its affiliates on June 5, accusing the crypto exchange and failing to register as a securities exchange and for allowing U.S. customers to trade cryptocurrencies it claims are securities.
Additionally, the regulator accused Binance CEO Changpeng Zhao (CZ) of being able to access Binance.US customer funds, and that he moved $12 billion in Binance’s funds through a privately-controlled entity called Merit Peak.
The next day on June 6, the SEC filed an emergency motion for a temporary restraining order against Binance, requesting that assets held on Binance.US be frozen until the crypto exchange could prove that the funds were not able to be moved by CZ or any other executive at Binance.
While both Binance and Binance.US have repeatedly denied the SEC’s claims on social media over the course of the last week, a joint memorandum submitted alongside the filing marked the first official comment made regarding the accusations.
It argued that the SEC is unable to “identify a single instance in which BAM customer assets were mishandled or misused.”
“Indeed, there is no ‘emergency’ here at all, other than the one manufactured by the SEC for its own purposes,” the memorandum added.