In a motion filed on June 21, Binance.US claimed the SEC has no evidence that the crypto exchange commingled users’ funds.
In the past few years, the Binance cryptocurrency exchange has made a significant entrance into many global markets including the United States. However, since the implosion of FTX and Alameda Research late last year, which affected many institutional investors and retail traders, the Binance market share continues to be under threat due to regulatory scrutiny and competition from other exchanges.
In the United States, Binance is currently fighting the Securities and Exchange Commission (SEC) for allegedly listing unregistered securities and offerings. However, Binance and its legal team have passionately denied the allegations by the SEC and even accused the chairman Gary Gensler of a conflict of interest.
Moreover, Binance alleged that Gensler once applied for an informal adviser to the exchange before being appointed as the SEC chair.
Binance and Its Legal Team Dispute SEC’s Claims
According to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, Binance and its CEO Changepeng Zhao (CZ) commingled users’ assets at will, thus putting investors at risk of losing their funds.
“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please, as we have alleged, these prohibitions are essential to protecting investor assets,” Grewal noted.
In the initial file charges on June 5, Gensler noted that CZ and Binance engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law. As a result, the SEC filed thirteen charges, against Zhao and Binance entities.
However, Binance and its legal team – in a June 21 filing in the US District Court for the District of Columbia – allege that the SEC issued misleading statements regarding the handling of customer assets. While referring to Grewal’s statements, Binance, and its legal team highlighted that the SEC has no evidence that the exchange commingled customers’ assets or diverted the assets at will.
Lmao @ Binance v. SEC #FireGensler
Court: “I want to know, are BAM assets going offshore? Is it happening or is it not? It’s stunning to me that I’ve now asked this question to each of the SEC attorneys 5 times.”
SEC: “So currently the assets are not going offshore… We’re not… pic.twitter.com/QkEY5HM2ji
— Tree of Alpha (@Tree_of_Alpha) June 21, 2023
If approved by the judge, the motion could prevent the SEC from making certain statements in public as Binance allege they would lead to market confusion.
“The SEC’s press release also appears to be designed to introduce unwarranted confusion into the marketplace, which could have the effect of harming BAM customers rather than protecting them. It also risks tainting the jury pool with misleading descriptions of the evidence concerning the Defendants,” Binance noted.
As the leading centralized crypto exchange, Binance is at risk of losing customers amid regulatory scrutiny. Moreover, more institutional investors are investing in regulated crypto exchanges. Nonetheless, Binance continues to make entrance to other global markets including recently in Kazakhstan.