Binance asks court to deny SEC’s restraining order
- Binance claimed in its filing that SEC freezing Binance’s assets would put customers at risk.
- Judge urges compromise to protect customer funds.
Binance [BNB] recently requested the court to deny the U.S. Securities and Exchange Commission’s (SEC) restraining order since it would effectively end the company’s business.
As per a recent Bloomberg report, District Judge Amy Berman Jackson referred both the SEC and Binance to a magistrate judge to work toward a compromise. This was to protect customer funds without winding down the exchange.
The move allows the exchange to avoid freezing all of its assets. Jackson said,
“Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general.”
An update on the negotiations has been scheduled for 15 June.
The SEC had called for a temporary restraining order to freeze the funds until Binance.US can demonstrate that no company member, including the owner Changpeng Zhao “CZ,” has access to them.
However, in a filing to the U.S. District Court for the District of Columbia, the company’s attorneys stated that it would be a “draconian and unduly burdensome” step that would ultimately kill BAM Trading Services’ business. The entity behind Binance.US is known as BAM.
According to the SEC, BAM is controlled by BAM Management US Holdings, which is largely owned by CZ.
On 5 June, the SEC charged Binance, Binance.US and Zhao for allegedly violating securities laws in the U.S. According to the regulatory authority, the firms operated as an unregistered securities exchange, broker, and clearinghouse all in one, allowing U.S. consumers to trade in tokens.
The regulator also alleged that Binance and CZ could access customer funds, moving millions to CZ-owned enterprises such as Merit Peak and Sigma Chain.
Binance had already dismissed these allegations. Their attorneys claimed in the latest court filing that SEC freezing the firm’s assets would put customers at risk.
What Binance proposes next
Binance.US instead suggested a proposal that it could transfer all of its assets to BAM’s “possession, custody and control.” In this way, only employees would be able to access those assets, with CZ out of reach of the funds.
In this scenario, Binance.US would have to transfer all funds to new wallets. Furthermore, the SEC’s allegations concern registration irregularities, not fund misuse.
The SEC failed to demonstrate that Binance.US offered BNB as an investment contract, according to the company’s filing. This is despite the fact that in its motion, the SEC identified only BNB on the Binance.US platform as an unregistered security.
It further reiterated the claim that prior to the latest enforcement action by the SEC, the company had been complying with the agency.