Key Takeaways:
- Binance.US claimed the SEC’s allegations against the exchange would fail.
- CEO Changpeng Zhao and Binance Holdings filed to oppose the regulator’s restraining order.
PATNA (CoinChapter.com) — Binance.US has filed its defense against the SEC’s numerous allegations ahead of its hearing on June 14 to determine if the court should freeze the exchange’s funds.
BAM Trading Services Inc. submitted its opposition to the SEC’s motion for a temporary restraining order, asset freeze, etc. BAM Trading operates Binance.US, the exchange’s US arm.
The firm noted that it was willing to work with the regulatory body to reach a compromise concerning the SEC’s objections. Furthermore, the defendants claimed it twice offered stipulations addressing all the SEC’s concerns in the motion.
Binance.US appealed that the SEC allow BAM trading to conduct daily business activities, such as paying salaries. The exchange assured that it would not transfer any asset to Binance Holding or its CEO Changpeng Zhao.
However, the SEC rejected Binance.US’s proposal, stating it was “insufficient to address unspecified “risks” to customer assets.”
Moreover, the defendants noted that the regulator sought “unnecessary and unjust” relief. BAM Trading requested the court to deny the SEC’s motion since it would hamper the firm’s ability to stay afloat.
For example, the regulatory watchdog plans to ask the court to freeze all operations at BAM Trading and, therefore, at Binance.US. The firm labeled the demand as being “draconian and unduly burdensome.”
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Far from requesting relief that is “carefully calibrated” to “maintain the status quo” (Mem. at 3), the SEC’s proposed remedies would effectively end BAM’s business.
BAM Trading stated in its filing
The defendants speculated that a freeze would likely result in banking partners dishonoring fund transfer requests even for actions like customer redemption.
Binance And Zhao Oppose SEC’s Restraining Order
In a joint memorandum of law on behalf of defendants Binance Holdings Ltd. (BHL) and CEO Changpeng Zhao, the defense opposed the request for a temporary restraining order. The defense stated that the court should deny the SEC’s request as there was no risk to BAM’s customer assets.
Indeed, there is no “emergency” here at all, other than the one manufactured by the SEC for its own purposes, when the alleged securities law violations, according to the SEC, have been going on publicly and openly for years.
Binance Holdings Ltd stated in its motion
Regarding the SEC’s allegation that Binance and its affiliated companies have been operating unlawfully since 2017, the defendants asked why the regulatory watchdog allowed the firms to grow for so long.
The exchange also questioned how the sudden “emergency” coincided with the SEC suing Binance and Coinbase on back-to-back days. Moreover, the defendants argued that the plaintiff carried the burden to establish its right to request the restraining order.
However, the defendants claimed the SEC only has “unfounded and subjective worries of its staff” instead of concrete evidence.
Moreover, the defense stated that the SEC sought relief outside the scope of the “actual violations” it asserted against Binance Holdings and Zhao.
The SEC’s brief does not identify a single instance in which BAM customer assets were mishandled or misused. Its charges against BHL and Mr. Zhao, focused exclusively on failure to register, do not demonstrate that the dramatic remedies the SEC seeks are justified at all.
The defendants said in their appeal
Binance also accused the regulator of abusing its discretion to avoid forming laws that clear its stance on the crypto sector. Moreover, the defense claimed that granting the SEC’s request for a temporary restraining order would harm the public and the digital asset industry.
