The US Securities and Exchange Commission (SEC) has submitted a court motion requesting a temporary restraining order. The order aims to freeze assets connected to Binance.US, a division of the cryptocurrency exchange Binance. The SEC’s action follows the lawsuit filed against Binance, Changpeng Zhao, and Binance.US for compliance and control failures. It occurred within a day of the initial lawsuit.
The court filing, made in the D.C. District Court, includes a specific request to freeze assets tied to BAM Management US Holdings and BAM Trading Services. These entities are the holding and operational firms for Binance. The US. According to the SEC’s lawsuit, businesses associated with Zhao have unauthorized access to clients’ assets at Binance. The US.
The SEC states that the asset freeze is necessary to protect consumer assets and prevent the loss of accessible assets. The regulatory body highlights the defendants’ history of illegal behavior and disregards US laws. It also mentions their avoidance of regulatory oversight and unanswered inquiries regarding money transfers and client asset custody.
If the restraining order were granted, Binance would need to ensure within five days that only Binance.US had access to customer funds. Binance would need to move all user assets within 30 days to fresh wallets that are only accessible by Binance.US.
User assets continue to be safe and secure, according to a tweet from Binance.US in reaction to the SEC’s activities. According to reports, the company’s lawyers have sent the SEC information addressing worries regarding fund safety.
Specific Request to Freeze Assets Tied to BAM Management and BAM Trading
In its memorandum of law, submitted with the request for a temporary order, the SEC reiterates its claims from the original action. It highlights Binance’s use of funds from Binance.US and implies that Changpend Zhao and Binance stated a wish to avoid American regulators. The SEC raises concerns about BAM Trading’s ability to custody customer assets. This follows the recent implementation of formal standards for handling crypto assets.
The SEC alleges that Sigma Chain and Merit Peak, linked to Changpeng Zhao, accessed customer funds worth billions. BAM Trading held the funds.
User funds on Binance.US were never in danger, Biance stressed in its statement in response to the case. The exchange vowed to vigorously defend itself against the SEC’s allegations.
The legal actions against Binance and ongoing regulatory scrutiny underscore the unpredictability of the cryptocurrency market. They also highlight the evolving nature of the regulatory environment.