Lawyers Accuse SEC of Making Misleading Statements
Lawyers representing United States-based crypto exchange Binance.US, global exchange Binance Holdings Limited, and Binance CEO Changpeng “CZ” Zhao have filed a motion alleging the U.S. Securities and Exchange Commission (SEC) misled the public in statements issued over an ongoing securities lawsuit.
Allegations of Misleading Statements
In a June 21 filing in the U.S. District Court for the District of Columbia, the legal teams for Binance, Binance.US, and CZ claimed the SEC had made “misleading” statements in a June 17 press release and filed a motion for the financial regulator to comply with “applicable rules of conduct.” The filing referred to SEC Enforcement Director Gurbir Grewal claiming CZ and Binance could “commingle customer assets or divert customer assets as they please” and an order requiring all parties involved in the lawsuit to return to the United States.
- The SEC has no evidence that BAM [Binance.US] customer assets have been dissipated, commingled or misused in any way.
- The SEC’s press release also appears to be designed to introduce unwarranted confusion into the marketplace, which could have the effect of harming BAM customers rather than protecting them.
- It also risks tainting the jury pool with misleading descriptions of the evidence concerning the Defendants.
Potential Order Impacting SEC Statements
The order, if approved by a federal judge, could prevent the SEC from issuing certain public statements on the Binance lawsuit for the duration of the case that “may materially impact court proceedings.” The Binance legal team provided part of a transcript of a June 13 hearing in which counsel for the SEC acknowledged that there was no evidence that assets from Binance.US were “going offshore.”
“The SEC’s press release is misleading, contains statements that the SEC knows to be unsupported by evidence, and is inconsistent with the rules of professional conduct,” the court filing stated.
SEC Lawsuit Background
The court filing is part of the SEC’s ongoing lawsuit against Binance, Binance.US, and CZ filed on June 5, alleging unregistered securities offerings and Binance’s failure to register as an exchange or a broker-dealer clearing agency. SEC Chair Gary Gensler said at the time that CZ and Binance had “misled investors about their risk controls,” with the regulator seeking disgorgement and other penalties.
The SEC filed a motion in an attempt to have the court freeze all Binance.US assets but ultimately reached a compromise agreement in which only the exchange’s employees would have access to client funds while the litigation was ongoing. Amid the U.S. legal proceedings, Binance announced the launch of a regulated crypto platform in Kazakhstan.
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