Binance.US, the American unit of leading cryptocurrency exchange Binance, has urged a federal judge to deny the Securities and Exchange Commission’s (SEC) request to freeze billions of dollars of assets during a legal fight with the regulator, claiming that it would damage its business and hurt customers.
“Operations would quickly grind to a halt” without the ability to pay employees, vendors, suppliers, and professionals or to maintain the trading platform. With a freeze of all corporate assets, banking partners would most likely cease to honor requests to transfer funds for any purpose, including customer redemptions,” Binance.US attorneys said Monday in a court filing.
SEC Sought Binance.US Asset Freeze
The SEC’s requested asset freeze comes a week after it filed a lawsuit against Binance.US, Binance Holdings Ltd., and its founder, Changpeng Zhao (CZ), accusing them of violating US securities laws and overextending their access to customer funds.
According to a Bloomberg report on June 12, the SEC filed an emergency petition to restrain Binance.US’s assets in order to protect consumer funds, including repatriating client investments held overseas. Per the SEC lawsuit filed last week, the breaches included mismanagement of client funds and misleading investors and regulators. Binance denied these allegations.
Binance.US Opposes SEC’s Asset Freeze Request
Binance.US’s legal defense team filed a statement opposing the Securities and Exchange Commission’s asset freeze request and has argued that US customer assets are secure. According to the filing, Binance.US has stated that the SEC’s requested relief is “draconian” and uncalled for.
The ongoing controversy has already resulted in one of Binance.US’s banking partners notifying the exchange that it will cease holding its assets from June 14, according to Bloomberg. The report added that the banking partner has also frozen all activities in Binance.US’s account until the SEC’s emergency action is ruled on by the court.
Meanwhile, the court hearing on the case is set to take place before Judge Amy Berman Jackson in Washington federal court on June 13.
