US SEC Seeks Control of Binance.US Assets in Legal Battle
The United States Securities and Exchanges Commission (SEC) is taking action to gain control over the assets of Binance.US, the American branch of the world’s largest cryptocurrency exchange. This development came to light in a restraining order filed recently.
On June 5, the SEC filed a lawsuit against Binance, Changpeng Zhao (CZ), and Binance.US, alleging violations of US securities laws. The commission also claimed that Binance.US had mixed customers’ funds with an entity controlled by CZ. In the same legal action, the regulatory authority classified 10 cryptocurrencies, including Solana (SOL) and Cardano (ADA), as securities.
SEC Moves to Take Control of Binance.US
In the filed restraining order, it is stated that the assets of the exchange should be frozen to “preserve the status quo, prevent dissipation or transfer” of the funds to another jurisdiction. Additionally, the order aims to safeguard the court’s ability to enforce disgorgement, prejudgment interest, and civil penalties. The document reads:
“Defendants BAM Management and BAM Trading and their agents, servants, employees, attorneys-in-fact, and those persons in active concert (…) shall hold and retain within their control, and otherwise prevent any disposition, transfer, pledge, encumbrance, assignment, dissipation, concealment, or other disposal whatsoever of any of their funds or other assets or things of value (…)”.
Furthermore, the filing specifies that within five days of court approval, customer funds should be under the sole control of BAM Trading. The SEC’s primary objective is to remove Binance and its CEO, Zhao, from any authorization or involvement in the transfer or withdrawal of US customer assets. The filing further states:
“Ensure that neither Defendant Binance, nor Defendant Zhao, nor any of the Binance Entities obtains possession, custody, or control over Customer Assets, including by being designated as an account holder or signatory of any account or wallet holding Customer Assets without first obtaining leave of the Court”.
Additionally, the filing requires Binance.US to transfer all crypto assets to a different wallet with new private and administration keys. The commission also demands that the new wallet details should not be disclosed to Binance, CZ, or any related entities. This process must be completed within 30 days of the court granting the restraining order.
Once approved, any transfers exceeding $100,000 will require written approval from the CEO and CFO. Furthermore, Binance.US may consider transferring its staking service to either BitGo or Aegis, subject to meeting the SEC’s conditions.
Binance.US Responds to SEC Claims
In response to the SEC’s allegations, Binance.US took to Twitter to express their side of the story. In a tweet, they stated that the filing of the preliminary injunction was unwarranted. The US arm of the cryptocurrency exchange also expressed disappointment about the situation.
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