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Binance.US challenges SEC’s proposed restraining order, citing potential closure

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TL;DR Breakdown

  • Binance.US has requested the U.S. District Court to reject the SEC’s proposed restraining order, warning that it would lead to the closure of its business.
  • The crypto exchange argues that the SEC’s claims fail to identify any securities traded on its platform and questions the regulator’s assumption that all cryptocurrencies are securities.
  • Binance.US has proposed an alternative solution to address the SEC’s concerns and suggests transferring assets to BAM’s control, ensuring customer funds remain secure while addressing registration irregularities.

Binance.US has filed a request with the U.S. District Court to deny the proposed temporary restraining order by the Securities and Exchange Commission (SEC). Binance.US argues that implementing the order would effectively lead to the closure of BAM Trading Services Inc., the entity behind Binance. US. The SEC’s emergency motion for the restraining order is scheduled for a hearing on June 13.

Binance.US strongly criticized the SEC’s approach to the legal action, calling it “draconian and unduly burdensome.” The crypto exchange pointed out that the SEC still needs to identify a single security trading on BAM’s platform, countering the regulator’s claims that at least 68 cryptocurrencies qualify as securities. Binance.US emphasized that numerous cryptocurrency exchanges, including BAM, have operated within the United States for years without interference from the SEC, challenging the assumption that they are unequivocally subject to securities laws.

Binance responds to SEC allegations, calls for balanced approach

In response to the SEC’s allegations, Binance and Binance.US have formally addressed the accusations through a joint memorandum. The memo, submitted alongside the court filing, refutes the SEC’s claim that BAM customer assets were mishandled or misused, highlighting that no such instances have been identified. It further argues that no real emergency necessitates the SEC’s proposed restraining order, accusing the regulator of manufacturing a crisis for its own purposes.

The SEC’s charges against Binance, Binance.US, and CEO Changpeng Zhao (CZ) include violating securities laws by operating as an unregistered securities exchange, broker, and clearinghouse and facilitating the trading of cryptocurrencies considered securities by the SEC. Furthermore, the regulator alleged that CZ had access to customer funds and transferred millions to entities under his control, such as Merit Peak and Sigma Chain.

Binance.US has proposed an alternative solution to address the SEC’s concerns. The company suggests transferring all assets to BAM’s “possession, custody, and control,” ensuring only authorized employees can access them while keeping CZ separated from the funds. This proposal would require transferring all funds to new wallets but would safeguard customer assets while addressing registration irregularities raised by the SEC rather than alleging fund misuse.

Binance.US’s legal team reiterates the company’s commitment to cooperation, emphasizing its significant efforts to collaborate with the SEC’s investigation that commenced in December 2020. The investigation has provided extensive data on Binance.US’s day-to-day operations, including over 700,000 individual communications.

As the legal battle unfolds, the outcome of the June 13 hearing will shed light on the path ahead for Binance.US and the SEC.

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