- Binance.US has asked a judge not to warrant an asset freeze demanded by the SEC
- The exchange warned that the impact of such a move would effectively kill its business before it had a chance to defend itself
- A judge is set to rule on the motion today
Binance.US has hit back at the charges brought against it by the Securities and Exchange Commission (SEC) and has pleaded with the court not to freeze its assets. The SEC last week demanded that Binance.US’s assets be frozen due to perceived irregularities over the sale of securities and violation of AML/KYC regulations, with a decision due on the matter today. Binance.US argued that the temporary restraining order sought by the SEC would be “draconian and unduly burdensome” and its operations would “effectively end” its business.
Asset Freeze Would Kill Binance.US
The SEC hit Binance, Binance.US, and its CEO Changpeng Zhao with multiple charges last week relating to the way it operated its service in the US, accusing it of actively flouting KYC/AML rules and knowingly selling unlicensed securities. It advocated for a ban and financial penalty for both Binance.US and Zhao, adding to issues the exchange is already facing with a CFTC lawsuit.
Binance.US warned that in allowing the restraining order the court would be effectively killing its business before it has had a chance to defend itself:
The requested relief would primarily harm BAM’s customers, effectively put BAM out of business, and prevent BAM from defending itself in this litigation.
The exchange also argued it would no longer be able to pay its employees, vendors or other parties, or even maintain its technology were the freeze granted. A judge will make a decision today in what will turn out to be a pivotal first battle between the exchange and the regulator.
Binance Wheels Out Big Guns
To aid its cause, Binance has pulled in a huge gun to help fight its corner. George Canellos, a partner at Milbank’s New York office, yesterday announced his role as counsel alongside three others, having previously served as a co-director of the SEC’s enforcement division from 2009 to 2014. During his tenure, he played a significant role in investigations that resulted in $570 million in penalties against JPMorgan Securities, Credit Suisse Securities, RBS Securities, and Bank of America.
With a track record of representing numerous executives and companies in SEC cases, Canellos has established himself as a reputable figure in this realm. Indeed, former Commodity Futures Trading Commission Chief David Meister praised Canellos in a 2014 New York Times article, describing him as “extremely well thought of” within the regulatory community.
Binance clearly hopes the use of a team so experienced in the ways of the SEC will help its case, with possible fraud charges on the line for Binance.US and Zhao.
