Binance.US and its CEO Changpeng Zhao have argued against the US Securities and Exchange Commission’s (SEC) temporary restraining order to freeze its assets. The lawyers stated that there was no risk to customer assets and that the SEC’s proposed restraining order should be denied. They argued that the SEC had manufactured an emergency for its own purposes, and that the alleged securities law violations had been going on publicly and openly for years. Granting the SEC’s requested relief would harm BAM customers and effectively end BAM’s business, the lawyers said. BAM Trading Services Inc. and BAM Management US Holdings Inc. run Binance.US.
The SEC sued Binance and Zhao over a “blatant disregard of the federal securities laws” and racked up 13 charges last week. A day later, the agency filed an emergency motion seeking a temporary restraining order in the US District Court for the District Court of Columbia, asking a judge to freeze assets of BAM Trading and BAM Management. The SEC said relief is needed in part to “ensure the safety of customer assets.”
Lawyers for Binance and Zhao said they first learned they were potentially targets of an SEC investigation involving Binance.US in late February 2023. Despite frequent interaction over the next three months, the SEC never expressed concerns about the safety and security of Binance.US’s user assets. However, on May 30, 2023, the SEC’s position markedly shifted when it suggested in a letter to BHL that it had “significant questions and concerns” about the safety of customer assets and the unencumbered availability of funds at BAM Trading. Communications between the SEC and Binance continued up to June 2, and the agency filed the lawsuit days later on June 5.
The SEC’s proposed restraining order would harm BAM customers and end BAM’s business, Binance’s lawyers argued. The order would also cause significant harm to the reputation of Binance and Zhao. The SEC’s claims that Binance.US and Zhao had violated securities laws were not supported by the facts, the lawyers said. The SEC had failed to show that the defendants violated any laws, let alone that they did so recklessly or intentionally.
Binance’s lawyers also argued that the SEC’s proposed order was unnecessary, as Binance had been cooperating with the SEC since the investigation began. Binance had produced thousands of pages of documents and made numerous employees available for interviews. The SEC had not shown that Binance.US’s user assets were at risk, and the proposed order would do more harm than good.
Binance.US and its CEO Changpeng Zhao have argued against the SEC’s temporary restraining order to freeze its assets. The lawyers stated that there was no risk to customer assets and that the SEC’s proposed restraining order should be denied. Binance’s lawyers also argued that the SEC’s proposed order was unnecessary, as Binance had been cooperating with the SEC since the investigation began. The SEC had not shown that Binance.US’s user assets were at risk, and the proposed order would do more harm than good.
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