Binance.US Claims SEC Asset Freeze Would Harm Customers, Cripple Business

Key Points:

• Binance.US is fighting a Securities and Exchange Commission request to freeze billions of dollars of assets during a legal fight.
• The company says this move would cripple its business and hurt customers.
• One of its banking partners has already informed the company it will no longer hold its assets starting on June 14.

Binance.US is urging a federal judge to reject a Securities and Exchange Commission request to freeze billions of dollars of assets on the cryptocurrency exchange during a legal fight with the regulator.

The company argues that the move would cripple its business and hurt customers. “Operations would quickly grind to a halt” without the ability to pay employees, vendors, suppliers, professionals, or to maintain the trading platform, Binance.US attorneys said Monday in a court filing. “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.”

The SEC sought the asset freeze after suing Binance.US, Binance Holdings Ltd., and founder Changpeng Zhao last week, alleging “blatant disregard of US securities laws” and “years of violative conduct” that put customer funds at risk. Binance.US is also owned by Zhao.

According to the June 5 lawsuit, the violations included mishandling customer funds and misleading investors and regulators. The SEC filed an emergency action application for a temporary restraining order to freeze Binance.US’s assets in an attempt to protect customer funds, including through the repatriation of client investments held abroad. Binance has disputed the allegations.

The case is SEC v. Binance, 23-cv-01599, US District Court, District of Columbia (Washington, DC).

The lawsuit has already had an impact on the exchange’s business, as one of its banking partners has informed Binance.US that it will no longer hold its assets starting on June 14, according to the filing. The same partner froze all activity on the company’s account until after the court rules on the SEC’s motion.

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