SEC Requests Temporary Restraining Order to Freeze Assets Tied to Binance.US

The U.S. Securities and Exchange Commission (SEC) has taken legal action against Binance.US, a popular cryptocurrency exchange, by requesting a temporary restraining order to freeze assets associated with the company. The court filing, submitted to the D.C. District Court, aims to freeze the assets of BAM Management US Holdings and BAM Trading Services, which are the holding and operating firms for Binance.US.

The SEC’s lawsuit, filed on Monday, targets Binance.US, Binance Global, and Changpeng Zhao, the founder and CEO of Binance. The allegations primarily revolve around various compliance and control failures, with the SEC claiming that companies connected to Zhao were able to clandestinely access funds belonging to Binance.US customers.

In its court filing, the SEC emphasized the need for an expedited asset freeze to ensure the safety of customer assets and to prevent the dissipation of available assets for any potential judgment. The SEC cited the defendants’ history of non-compliant behavior, disregard for U.S. laws, evasion of regulatory oversight, and unresolved concerns regarding financial transfers, custody, and control of customer assets.

The SEC’s filing seeks additional orders, including the granting of a preliminary injunction, an order for defendants to repatriate assets held for the benefit of BAM customers, and an order prohibiting the destruction of records, among others.

If the temporary restraining order is approved, Binance would be given five days to ensure that only Binance.US has access to customer funds. Furthermore, within 30 days, all customer assets would need to be transferred to new wallets that can only be accessed by Binance.US.

In response to the SEC’s actions, Binance.US took to Twitter to reassure its users that their assets remain safe and secure. The company also stated that its legal team has provided the SEC with information addressing concerns regarding fund safety.

Monday’s lawsuit filing from the SEC hinted at the potential request for a temporary restraining order, with the regulator noting its intention to seek preliminary injunctive relief, including asset freezes and a verified accounting.

According to the SEC’s allegations, Binance allowed two companies linked to Changpeng Zhao, namely Sigma Chain and Merit Peak, to access billions of U.S. dollars held by BAM Trading, which belonged to Binance.US customers.

In an initial statement responding to the SEC lawsuit, Binance stated categorically that user funds on Binance.US were never at risk.

The court’s decision on the SEC’s request for a temporary restraining order will have significant implications for Binance.US and its ongoing legal battle with the U.S. regulatory authority. It remains to be seen how this development will impact the operations and reputation of Binance.US and the wider cryptocurrency industry as a whole.

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