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Binance’s U.S. branch has disputed assertions from the Securities and Exchange Commission (SEC) that the firm mishandled user assets as “misleading.”
In a motion submitted on Wednesday, the exchange highlighted conflicting statements from the regulator indicating that customer assets have not, in reality, been moved outside of the United States.
The SEC’s Conflicting Statements
In screenshots from a Wednesday submission later shared by Binance CEO Changpeng Zhao (CZ), Binance.US examined a dialogue between the SEC and the court, where the latter pressed the agency for a definitive response regarding whether Binance.US assets were being transferred offshore.
“So currently the assets are not going offshore,” the SEC responded. “We’re not seeing any flows of money outside the US.”
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The discussion pertained to the SEC’s request to impose an immediate freeze on Binance.US assets earlier this month, due to concerns that they were being dissipated internationally. That request was subsequently denied by the judge overseeing the case, who instructed both parties to negotiate an arrangement that would permit the platform to maintain business operations while ensuring assets remained domestic.
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In the SEC’s lawsuit against Binance on June 5, the agency alleged that both Binance and Binance US “commingled” billions of dollars in user assets within Merit Peak Limited – an entity owned and controlled by CZ. Assets from both companies are expected to be kept distinct.
“SEC’s statement that Defendants have been ‘able to commingle customer assets or divert customer assets as they please’ is directly contradicted by the SEC’s statements to the Court that the SEC has no evidence of that ever occurring,” Binance stated in its filing.
Affecting the Market
Binance.US further noted that the SEC’s remarks pose a risk of creating unnecessary confusion in the marketplace that could adversely affect its customers. Additionally, its claims risk “tainting the jury pool,” with misleading information regarding the evidence against the exchange.
If Binance’s motion is granted, it could restrict the SEC from making specific public statements, thereby impacting the market as Binance has claimed.
The cryptocurrency market declined earlier this month when the SEC announced its actions against Binance and Coinbase. Some of the most affected coins were those explicitly identified in the agency’s lawsuits as unlawfully traded securities, including BNB, Cardano (ADA), and Solana (SOL).
Although allowed to continue its business operations, Binance.US has already implemented job reductions following the lawsuit, likely impacting around 50 employees. Several of the platform’s banking partners have also terminated their relationships, compelling it to halt US dollar deposits for its customers.
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