Binance.US, one of the largest cryptocurrency exchanges in the United States, is facing a major legal battle with the Securities and Exchange Commission (SEC).
After suing Binance, the SEC has requested a federal judge to freeze billions of dollars of assets belonging to Binance.US, citing alleged violations of US securities laws and a disregard for customer funds.
However, Binance.US urges the judge to reject the SEC’s request, arguing that such a move would severely impact its operations and harm its customers.
In a court filing, the exchange attorneys stated that a freeze of all corporate assets would bring their operations to a halt, making it impossible to pay employees, vendors, suppliers, and professionals, as well as maintain the trading platform.
The exchange also revealed that one of its banking partners has already notified them of their intention to stop holding their assets starting on June 14, further complicating the situation.
The SEC’s lawsuit against Binance.US, Binance Holdings Ltd., and founder Changpeng Zhao alleges years of violative conduct and blatant disregard for US securities laws.
The regulatory body is seeking to protect customer funds by freezing the exchange’s assets, including repatriating client investments held abroad.
The exchange has strongly opposed the SEC’s claims, asserting that US customer assets are secure and that there is no need for such a drastic measure.
The exchange argues that the proposed asset freeze would effectively end its business and prevent it from defending itself in litigation.
The hearing for the temporary restraining order is scheduled for June 13 in the US District Court for the District of Columbia. Binance.US has criticized the SEC’s approach, stating that the regulator has failed to identify any securities trading on its platform.
The exchange maintains that it has cooperated with the SEC’s investigation since December 2020.
Binance.US Bolsters Defense Team with Lawyers from Milbank LLP
In the midst of this legal battle, Binance.US has bolstered its defense team by adding four lawyers from Milbank LLP, including George Canellos, a former co-director of the SEC’s enforcement division.
Canellos brings extensive experience in dealing with securities violations and will play a crucial role in Binance.US’s defense strategy.
As the hearing approaches, Binance.US continues to face challenges from its payment and banking partners, who have indicated their intention to pause support for its dollar channels on the platform.
It means that the exchange will be forced to shift to an all-crypto exchange, unable to process deposits and withdrawals in dollars.
The outcome of the legal proceedings will have significant implications for Binance.US and the broader cryptocurrency industry in the United States.
However, it remains to be seen how the court will rule on the SEC’s asset freeze request and whether Binance.US can successfully defend itself against the allegations of securities violations.
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