Binance, a cryptocurrency exchange, has disputed claims from the Securities and Exchange Commission (SEC) that the company mismanaged user assets. In response, Binance’s U.S. subsidiary has filed a motion stating that the SEC’s claims are misleading and have the potential to harm its customers.
Contradictory Statements from the Regulator
Binance’s U.S. subsidiary has highlighted contradictory statements made by the SEC in a recent conversation between the regulator and the court. The SEC had requested an immediate freeze on Binance’s U.S. assets, claiming that they were being dissipated internationally. However, the judge presiding over the case denied the request and ordered both parties to reach a deal that would allow the platform to continue its business operations while ensuring that assets remained in the United States.
Binance’s U.S. subsidiary reviewed the conversation between the SEC and the court and found that the regulator had stated that customers’ assets had not been transferred outside of the United States. The reply from the SEC was, “So currently, the assets are not going offshore. We’re not seeing any flows of money outside the US.” Binance has used this statement to dispute the SEC’s claims that the company has mismanaged user assets.
Commingling of User Assets
The SEC had claimed in its lawsuit against Binance that both Binance and Binance U.S. had “commingled” billions of dollars in user assets within Merit Peak Limited, an entity owned and controlled by Binance CEO Changpeng Zhao. Assets from both firms are supposed to be kept separate. However, Binance has stated in its filing that the SEC’s statement that the company has been able to commingle or divert customer assets as they please is directly contradicted by the regulator’s statements to the court that it has no evidence of that ever occurring.
Marketplace Confusion and Harm to Customers
Binance’s U.S. subsidiary has argued that the SEC’s comments risk producing unwarranted marketplace confusion that could harm its customers. In addition, inaccurate information about what evidence exists against the exchange risks tainting the jury pool. If Binance’s filing is approved, it could prevent the SEC from making certain public statements that could affect the market, as Binance has alleged.
The SEC’s lawsuits against Binance and Coinbase earlier this month caused a slide in the cryptocurrency market. 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).
Binance’s U.S. subsidiary has disputed the SEC’s claims that the company mismanaged user assets and has highlighted contradictory statements made by the regulator. Binance has also argued that the SEC’s comments risk producing unwarranted marketplace confusion that could harm its customers and taint the jury pool. If Binance’s filing is approved, it could prevent the SEC from making certain public statements that could affect the market.