Binance.US Initiates Lawsuit, Alleging SEC’s Misleading Statements

A motion has been filed by lawyers representing Binance.US, Binance Holdings Limited (the global exchange), and Binance CEO Changpeng “CZ” Zhao. The motion alleges that the United States Securities and Exchange Commission (SEC) provided misleading statements regarding an ongoing securities lawsuit.

According to the lawyers, the SEC’s statements have led to the belief that the SEC has misled the public about the case. Lawyers representing Binance.US, Binance Holdings Limited, and CEO Changpeng “CZ” Zhao have lodged a motion in the US District Court for the District of Columbia recently.

The motion asserts that the press release issued by the US Securities and Exchange Commission (SEC) on June 17 included statements that were “unsupported by evidence” and “inconsistent with the rules of professional conduct.”

The legal team argues that the SEC’s statements in the press release lack substantiation and do not align with accepted standards of professional conduct.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement stated:

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.

In relation to Grewal’s statements, the lawsuit emphasizes that the SEC has presented no evidence to support claims that the exchange engaged in the commingling of customers’ assets or diverted those assets at its discretion. The lawsuit challenges the SEC’s assertions by highlighting the absence of evidence in this regard.

Implications Of SEC Losing This Motion Against Binance.US

The motion argues that the SEC’s press release seems to have been crafted with the intention of creating unnecessary confusion within the market. Such confusion could potentially harm Binance.US and its customers rather than provide them with protection.

Additionally, the motion also claims that the press release runs the risk of prejudicing the potential jury pool by providing misleading descriptions of the evidence relating to the defendants involved in the case.

Binance has further accused SEC Chairman Gary Gensler of having a conflict of interest. They claim that Gensler had previously sought an informal advisory role with the exchange before being appointed as the SEC chair.

This allegation suggests that Gensler’s prior connection to Binance could potentially influence his decisions and actions as the head of the regulatory agency.

If a federal judge approves the order, it may restrict the SEC from making specific public statements about the Binance lawsuit during the case, as those statements could have a significant impact on the court proceedings.

The crypto platform’s legal team presented a transcript excerpt from a June 13 hearing, where the SEC’s counsel acknowledged the absence of evidence regarding assets from Binance.US being sent offshore. This motion is part of its ongoing defense strategy in response to the SEC’s lawsuit, which was initiated on June 5.

This lawsuit is just one of several regulatory actions that the platform has encountered in recent months, as regulatory bodies worldwide have intensified their scrutiny of the cryptocurrency industry.