Binance.US: Asset Freeze Will ‘Grind Operations to a Halt’

Binance.US says a regulator’s attempt to freeze its assets will put it out of business.

In a court filing Monday (June 12), the cryptocurrency company asked a judge to block a motion by the Securities and Exchange Commission (SEC) to freeze its assets, part of the regulator’s case against parent firm Binance and its founder.

“The requested relief would primarily harm BAM’s customers, effectively put BAM out of business, and prevent BAM from defending itself in this litigation,” the filing said, referring to BAM Trading Services, the company behind Binance.US.

“Without the ability to pay its employees, vendors, suppliers, and professionals in the ordinary course of business and to maintain its technology platform, operations would quickly grind to a halt and BAM would be unable to even fund its defense to this action.”

The SEC last week charged Binance and founder Changpeng Zhao with a number of offenses, including diverting customer funds, failing to keep U.S. customers from its platform and inflating trading volumes.

Days later, the commission sought court permission to freeze Binance.US’s assets and give those funds back to its customers.

“The SEC respectfully submits that this relief is necessary … given the Defendants’ years of violative conduct, disregard of the laws of the United States, evasion of regulatory oversight, and open questions about various financial transfers and the custody and control of Customer Assets,” the agency said in its filing.

Binance.US has called the SEC’s actions “unwarranted” and responded last week by saying it would stop accepting dollar deposits and withdrawals.

The SEC’s actions against Binance came the same week the commission sued fellow crypto platform Coinbase for securities law violations.

“At the center of the SEC’s lawsuits is the allegation that among the hundreds of cryptocurrencies being traded across both Binance’s U.S.-based platform and Coinbase’s crypto exchange, at least 19 of them are securities,” PYMNTS wrote earlier this week.

And because neither company had registered with the SEC as a securities exchange, broker and clearing house — as required by law — the regulator alleges they are operating illegal, unregistered securities exchanges.

The actions, that report noted, could indicate that years of “financial freewheeling” for digital asset companies could be winding down.

“The crypto community believed and had a real conviction that what they were doing was so new that existing laws could not possibly apply,” Amias Gerety, partner at QED Investors, said in an interview with PYMNTS’ Karen Webster. “And in the history of financial services, there’s basically never been a group of people with any commercial success who had that conviction.”