Binance.US Refutes SEC Claims About Mishandling User Funds
Binance’s U.S. subsidiary has challenged claims from the Securities and Exchange Commission (SEC) that the company mismanaged user assets as “misleading.”
In a motion filed on Wednesday, the exchange pointed to contradictory statements from the regulator suggesting that customers’ assets have not, in fact, been transferred outside of the United States.
The SEC’s Conflicting Statements
In screenshots from a Wednesday filing later shared by Binance CEO Changpeng Zhao (CZ), Binance.US reviewed a conversation between the SEC and the court, where the latter pressured the agency for a clear answer on whether Binance.US assets were being transferred offshore.
“So currently the assets are not going offshore,” replied the SEC. “We’re not seeing any flows of money outside the US.”
Lmao @ Binance v. SEC #FireGensler
Court: “I want to know, are BAM assets going offshore? Is it happening or is it not? It’s stunning to me that I’ve now asked this question to each of the SEC attorneys 5 times.”
SEC: “So currently the assets are not going offshore… We’re not… pic.twitter.com/QkEY5HM2ji
— Tree of Alpha (@Tree_of_Alpha) June 21, 2023
The conversation related to the SEC’s request to place an immediate freeze on Binance.US assets earlier this month, due to fear that they were being dissipated internationally. That request was later denied by the judge presiding over the case, who ordered both parties to negotiate a deal that would allow the platform to continue business operations while ensuring assets stayed homebound.
In the SEC’s lawsuit against Binance on June 5, the agency claimed that both Binance and Binance US “commingled” billions of dollars in user assets within Merit Peak Limited – an entity owned and controlled by CZ. Assets from both firms are supposed to be kept separate.
“SEC’s statement that Defendants have been ‘able to commingle customer assets or divert customer assets as they please’ is directly contradicted by the SEC’s statements to the Court that the SEC has no evidence of that ever occurring,” wrote Binance in its filing.
Affecting the Market
Binance.US added that the SEC’s comments risk producing unwarranted marketplace confusion that could harm its customers. Furthermore, its claims risk “tainting the jury pool,” with inaccurate information about what evidence exists against the exchange.
If Binance’s filing is approved, it could prevent the SEC from making certain public statements, and thus affecting the market as Binance has alleged.
The crypto market slid earlier this month when the SEC announced its cases against Binance and Coinbase. Some of the hardest hit coins were those specifically named within the agency’s lawsuits as illegally traded securities, including BNB, Cardano (ADA), and Solana (SOL).
Though allowed to continue business operations, Binance.US has already resorted to job cuts following the lawsuit, likely to affect roughly 50 employees. A number of the platform’s banking partners have also severed ties, forcing it to suspend US dollar deposits for its customers.
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