When the SEC sued Binance on the 5th of June, it also requested a total freeze on all Binance.US assets, citing an alleged tendency to comingle customer funds and move them offshore.
Granting this request would have not only been devastating to Binance’s operations – not to mention overkill, since the allegations had not been proven in the slightest – they would have also damaged the firm’s reputation to the point where Binance.US would have had a hard time getting back on its feet if proven innocent.
Lawyers for Binance.US immediately requested that the SECs’ motion be denied, stating that they “will not accept the death penalty eight days into the case.”
Furthermore, in a 42-page memorandum submitted jointly by Binance.US and CZ, the defendants lambasted the SEC for making spurious accusations, as no clear evidence of wrongdoing had been found that would justify an emergency asset freeze.
“There is no ‘emergency’ here at all, other than the one manufactured by the SEC for its own purposes.”
In response to both the motion submitted by the SEC and the arguments made by Binance.US’s legal team, the judge presiding over the case denied the agency’s request. Instead, Binance.US and the SEC have been ordered to work together to flesh out a plan that would allow the exchange to continue operating as usual while ensuring that customer assets remain safe and, most importantly, within U.S. jurisdiction.
“Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general. (Work it out) – The nitty-gritty of it is better handled by you than by me.”
In order to reach a compromise, the SEC wants all customer assets to be repatriated to the U.S. if there are any hosted elsewhere.
Binance.US has not objected to this proposal so far, asking only to be allowed to use, withdraw, and send assets that would allow it to cover operational costs and salaries.
SEC/Binance Newsflash: Dueling Consent Orders (Read Them Now)
The SEC and the Binance defendants have each submitted draft orders of what each party wants the Judge to order in the SEC/Binance Emergency Asset Freeze Enforcement Action.
There is obviously a lot of conflict… pic.twitter.com/UWjXSgL5lR
— John Reed Stark (@JohnReedStark) June 13, 2023
If this plan were to be approved, Binance.US pledges to refrain from any transfers or payments to other Binance entities without explicit approval from the judge presiding over the case.
The judge has since ordered Binance.US to provide a rough list of recurring expenses and operational costs for preliminary perusal.
