- Binance.US was yesterday threatened with an asset freeze from the SEC
- The agency filed a supplementary lawsuit demanding that the court freeze its assets
- Bitcoin outflows increased, but not to any appreciable extent
The US government yesterday requested a court order to freeze the assets of two Binance entities, just one day after filing a lawsuit against the world’s largest cryptocurrency exchange for attempting to evade regulatory oversight. The Securities and Exchange Commission (SEC) followed up its lawsuit by asking for the order against BAM Management US Holdings, operator of Binance.US, and BAM Trading Services, alleging that Binance misrepresented these units as independent entities while secretly maintaining control over them through the parent company and its CEO, Changpeng Zhao.
SEC Follows Up Securities Lawsuit with Asset Freeze Request
The SEC submitted its motion to the federal court for the District of Columbia the day after it filed its charges against the exchange in the same court. The SEC stated that it aims to protect customer assets at Binance’s US operations due to the companies’ “long-standing violation of regulations, disregard for US laws, evasion of regulatory oversight, and unanswered questions regarding financial transfers and the custody and control of Customer Assets.”
According to the initial complaint, Binance has demonstrated a “blatant disregard” for federal securities laws, and the parent company and Zhao have profited by billions of US dollars while exposing investors’ assets to significant risks. The SEC is seeking the disgorgement of all unlawfully obtained gains by Binance, as well as the payment of civil penalties. However, specific amounts were not specified.
Binance.US Says Funds Are Safe
Binance.US responded to the asset-freeze motion on Twitter, where it urged customers not to panic as assets remained safe:
This afternoon, the SEC filed a motion seeking a TRO and preliminary injunction against https://t.co/AZwoBOgsqS attempting to, amongst other things, freeze https://t.co/AZwoBOgsqS corporate assets. User assets remain safe and secure and the platform continues to be fully…
— Binance.US 🇺🇸 (@BinanceUS) June 6, 2023
Binance.US later added that the SEC’s action “represents legal maneuvering rather than genuine concern for Binance.US customers and the safety of their assets,” suggesting it has faith that it can fight off the attempts to freeze the assets under its control.
While the lawsuit and the asset freeze request has prompted the biggest bitcoin withdrawal from Binance this year, analysts were quick to point out the context of such a move:
This demonstrates the statistical significance of the ‘biggest $BTC outflows on @Binance this year.’ pic.twitter.com/f9NxPRevUz
— Ki Young Ju (@ki_young_ju) June 5, 2023
