February 23, 2024

Binance.US, Binance Holdings, and Binance CEO Changpeng Zhao have accused the U.S. Securities and Exchange Commission (SEC) of misleading the public through statements in an ongoing lawsuit.

The charge was made in a motion filed in the U.S. District Court for the District of Columbia by attorneys representing Binance.US on June 21.

The SEC Intentionally Misled the Public

According to arguments presented by attorneys representing Binance.US, the SEC’s June 17 press release was misleading and called on the financial regulator to abide by “applicable rules of conduct.” In a press release, the SEC accused Binance and CEO Changpeng Zhao of mixing customer assets.

“As we said, these prohibitions are critical to protecting investor assets, given that Changpeng Zhao and Binance control the platform’s client assets and are able to mix or transfer client assets at will.”

The motion alleges that the SEC press release contained statements that were unsupported and lacked evidence. The lawsuit also emphasizes that the SEC has provided no evidence to support its claim that Binance commingled customer funds or moved them at its discretion. A Binance representative said,

“The SEC has no evidence that BAM (Binance.US) customer assets have been dissipated, mixed, or misused in any way.”

It also claimed that the SEC press release was designed to cause further unwarranted confusion in the cryptocurrency market, adversely affecting BAM clients.

“The SEC’s press release appears designed to bring unnecessary confusion to the market, which may harm BAM customers rather than protect them. It also risks contaminating juries with misleading portrayals of the evidence about the defendants.”

Impact of the motion

The motion against the SEC also states that its press release may have misleadingly described events related to the defendants in the case, to the detriment of the jury. Binance also accused SEC Chairman Gary Gensler of a conflict of interest, claiming that Gensler sought an informal advisory position to Binance prior to his appointment as SEC chairman. Lawyers for Binance said Gensler’s previous ties to the exchange could have influenced his actions and decisions as SEC head.

If approved by a federal judge, the motion could have significant ramifications for the SEC. First, it could limit the ability of regulators to make public comments about the Binance lawsuit throughout the case, particularly any comments that could affect court proceedings. To support their argument, the Binance legal team also included some excerpts from the hearing held on June 13. During the hearing, SEC lawyers acknowledged that there is no evidence yet that Binance.US assets were transferred overseas. The motion filed by the defense attorneys is part of its defense strategy against the June 5 SEC lawsuit against Binance.

Lawsuit against Binance

The U.S. Securities and Exchange Commission Binance, Binance.US, and Binance CEO Changpeng Zhao accused them of failing to register as an exchange or broker-dealer clearinghouse and offering customers unregistered securities. Gary Gensler, chairman of the US Securities and Exchange Commission, also accused Binance of misleading investors in terms of risk control. Additionally, the SEC asked the court to freeze all Binance.US assets before reaching a compromise whereby only exchange employees would have access to client funds during the proceedings.

Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.