Binance Says SEC Made Delusive Statements on Exchange Assets

Binance’s legal team has filed a motion alleging that the US Securities and Exchanges Commission misled the public in statements concerning its assets in the ongoing lawsuit.

The motion referred to the SEC’s allegation that Changpeng Zhao (CZ) and Binance diverted customers’ assets to another entity controlled by the CEO.

 In the June 21 motion filed in the US District Court of Columbia, the lawyers representing Binance.US, Binance, and CZ asked the SEC to comply with “applicable rules of conduct.”

Binance Says SEC Fails to Comply With Applicable Rules of Professional Conduct

The legal team said the SEC’s enforcement director, Gurbir Grewal’s statement about Binance commingling customer assets, despite court transcript proving otherwise, is misleading to the public. 

In a June 17 press release, Grewal said that Changpeng Zhao and Binance could “commingle customer assets as they please” with an order mandating all parties involved to return to the US.

The June 21 filing stated that the SEC has no evidence that Binance.US (BAM) dissipated, commingled, or misused customer assets in any way. 

It also noted that the SEC’s press release appears designed to spread unnecessary confusion in the marketplace, which could harm BAM customers instead of protecting them.

The filing read: “The SEC’s press release is misleading, contains statements that the SEC knows to be unsupported by evidence, and is inconsistent with rules of professional conduct.”

In addition, the lawyers stated in the filing that the regulator’s statement could taint the jury pool with deceptive descriptions of the evidence about the defendants (Binance, BAM, and CZ).

If a federal judge approves the motion, it could block the SEC from releasing certain public statements concerning world’s largest crypto exchange that may impact court proceedings until the lawsuit ends. 

Binance’s legal team attached a portion of a transcript from a June 13 hearing in which the SEC’s lawyer acknowledged the lack of evidence showing that Binance.US moves customer assets offshore.

More Updates on the SEC/Binance Lawsuit

It bears mentioning that the latest filing is part of the ongoing court proceedings in the SEC/world’s largest crypto exchange lawsuit. 

On June 5, 2023, the US SEC filed a lawsuit against Binance, Binance.US, and world’s largest crypto exchange CEO Changpeng Zhao (CZ), alleging the trio offered unregistered securities.

The lawsuit also alleged that world’s largest crypto exchange failed to register as a crypto exchange or securities clearing agency. At the time, Gary Gensler, SEC Chairman, said that CZ and world’s largest crypto exchange misled investors by failing to disclose risks involved in their offerings. 

The SEC seeks disgorgement of all profit world’s largest crypto exchange generated since operating an “unregistered securities exchange,” among other penalties.

In addition, the SEC recently filed a motion asking the court to freeze all Binance.US assets. However, both parties (SEC and Binance) reached a compromise, with the judge ordering the repatriation of all assets held on behalf of Binance.US customers.

The order also restricts world’s largest crypto exchange officials from accessing customer funds as long as the litigation remains ongoing.