2023-06-07 03:29:54
United States Securities and Exchange Commission (SEC), – which likes to go beyond its own authority, so that over the years it has not been able to publish a single correct position on the legal status of cryptocurrencies, but at the same time it likes to fine crypto companies –, yesterday, it asked a court for a temporary restraining order to freeze Binance.US’s digital assets — meaning its users’ assets.
The court filing, filed in DC District Court, seeks approval to freeze assets related to Binance.US’s holding and operating company, BAM Management US Holdings and BAM Trading Services. The SEC sued Binance.US, Binance Global and Binance founder and CEO Changpeng Zhao (CZ) on Monday, alleging a number of compliance and audit deficiencies. Among other things, the SEC alleges that non-US registered companies connected to Zhao were able to dispose of the funds of Binance.US customers and freely move them between different legal entities. US money market laws prohibit the commingling of funds between financial legal entities with a single owner. A similar abuse has indeed happened before, just think of the notoriously bankrupt FTX, which, flouting the American money market laws, moved users’ funds between the FTX stock exchange and Alameda’s investment company.
“The SEC respectfully submits that this remedy is necessary on an expedited basis to ensure the safety of customer assets and to prevent the absorption of available assets under the pretext of any judgment, given the defendants’ years of wrongful conduct, disregard for US law, regulatory oversight evasion and open questions related to various financial transfers and the custody and control of client assets – including by the defendants who claim they are not subject to the court’s jurisdiction – as described in the statement of claim, reasons and supporting materials” says the SEC in a document.
In another filing, the SEC asks that “list reasons why the preliminary injunction cannot be granted”, “instruct the defendants to repatriate assets held for the benefit of BAM’s clients”, “prohibit the defendants from destroying the records”and many other measures.
If the order is upheld, Binance would have five days to ensure that only Binance.US has access to customer funds, and within 30 days all customer funds would be transferred to new wallets that only Binance.US can access .
Binance.US said in a tweet late Tuesday that “user devices are still safe”and stated that its lawyers had provided information to the SEC about concerns about the safety of the funds.
In its Monday filing, the SEC alleges that Binance allowed two companies affiliated with CZ, Sigma Chain and Merit Peak, to access BAM Trading’s “several billions of US dollars” for customer money.
Meanwhile, the former favorite of the Democratic senators, Sam Bankman-Fried, who cannot account for at least 10 billion dollars of FTX client money even in a low voice, can defend himself on bail. But we could also say that CZ has karma, since it was his tweet that started the collapse of FTX in November of last year. The lawsuit against Binance.US is clearly politically motivated, a last ditch effort by a well-liked competitor.
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