U.S. Judge Refuses to Freeze Binance and Binance.US Assets in SEC Case
The federal judge presiding over the U.S. Securities and Exchange Commission’s (SEC) case against Binance and Binance.US has declined to issue a temporary restraining order that would freeze the assets of the U.S. trading platform. This decision enables the American arm of the cryptocurrency exchange to continue its business operations while working towards resolving restrictions with the regulatory body.
Judge Amy Berman Jackson, from the D.C. District Court, expressed that if the two parties could reach an agreement on limits and restrictions, there would be no need for a restraining order. However, she ordered Binance.US to submit a comprehensive list of its business expenses to the court and instructed both parties to continue negotiations. A status update is expected by the end of Thursday.
During a packed courtroom session in Washington, the judge strongly questioned SEC attorneys about their motion to freeze all assets of the company until they could verify that nobody from Binance’s global platform, including Changpeng “CZ” Zhao, had access to the private keys. The judge appeared visibly frustrated by the responses provided when she inquired whether any customer funds from Binance.US had actually left the United States. The SEC attorneys expressed concerns about the control held by Binance’s global platform over enough private key shards to potentially move funds.
“I want to know if it’s happening or not,” Judge Jackson emphasized. “It’s stunning that I’ve asked each of you this.”
Earlier in the day, the judge hinted at the possibility of granting certain restrictions on Binance’s access to Binance.US assets without imposing a complete restraining order. She instructed both companies to reconcile their proposed limitations while directing the SEC to contrast its requirements with those proposed by the companies in lieu of the restraining order.
Jennifer Farer, an SEC lawyer, conveyed the commission’s willingness to allow Binance.US to continue its business operations. Representatives from Binance.US expressed their desire to have regular operating expenses and firmly stated that they were not willing to accept a total asset freeze, referring to it as a “death penalty.”
Farer highlighted that Binance.US had continuously changed its account of how crypto assets and funds were held. Initially, the platform informed the SEC of an agreement with Binance, but later claimed that the agreement was not operational and subsequently stated that the non-operational agreement had been suspended.
Another contentious point arose when Binance.US suggested the possibility of ceasing operations in the United States, prompting the need for an emergency order, according to the attorney. Farber remarked, “There’s a back-and-forth about whether they’re shutting down or not shutting down.”
Despite the conflicting arguments, Judge Jackson asserted that the parties were not significantly far apart. She emphasized that if they could reach a mutual agreement, it would provide sufficient time to thoroughly examine the details of the case.
The SEC filed a lawsuit against Binance, Binance.US, and Binance founder Changpeng “CZ” Zhao last week, accusing them of operating as an unregistered securities exchange, brokerage, and clearing agency. Additionally, the regulator alleged extensive mingling of funds, which allowed Zhao, a Canadian national residing in the UAE, access to Binance.US customer assets.
The SEC subsequently filed a motion for a temporary restraining order. In response, the crypto exchanges challenged the claims, arguing that the SEC had not definitively proven the listing of any securities and had failed to provide supporting evidence for the emergency motion.
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