A Securities and Exchange Commission (SEC) Monday effort to freeze Binance.US’s funds is a “draconian and unduly burdensome” move, the U.S. affiliate of the global crypto exchange argued Monday.
“If the Court does address the merits of the SEC’s motion, it should deny that motion. The SEC seeks unnecessary and unjustified relief. Far from requesting relief that is ‘carefully calibrated’ to ‘maintain[] the status quo’ … the SEC’s proposed remedies would effectively end BAM’s business,” Binance.US’s motion argued.
The SEC sued Binance, Binance.US and Changpeng “CZ” Zhao last Monday on allegations that the companies operated as an unregistered securities exchange, broker and clearinghouse all in one to allow U.S. customers to buy and trade certain cryptocurrencies that the regulator claimed were unregistered securities. The SEC also alleged that Binance (the global exchange) and its founder Zhao were able to access Binance.US’s customers’ funds, moving millions to entities like Merit Peak and Sigma Chain – two companies owned by Zhao.
The SEC filed for a temporary restraining order to freeze these funds until Binance.US was able to prove that no one at Binance, including majority owner Zhao, could touch them.
Binance and Binance.US had already denied the claims in blog posts and tweets last week, but Monday marked a court-ordered deadline for a formal response. The U.S. District Court for the District of D.C. will also hold a hearing on the motion on Tuesday, June 13 at 2:00 p.m. ET.
In Monday’s filing, Binance.US’s attorneys wrote that freezing its funds would “primarily harm BAM’s customers, effectively put BAM out of business, and prevent BAM from defending itself in this litigation,” as it could no longer pay its employees, vendors or other parties or even maintain its technology.
The freeze may also spook Binance.US’s banks, one of which has already announced it would cease doing business with the firm, the filing said.
Binance, Binance.US and Zhao have added their legal counsel to the court docket over the past week, including George Canellos, a former Department of Justice prosecutor and one-time SEC Division of Enforcement co-director.
