Binance.US, its global counterpart Binance Holdings Limited, and the company’s CEO, Changpeng “CZ” Zhao, have accused the US Securities and Exchange Commission (SEC) of deliberately misleading the public through statements it made around an ongoing securities lawsuit. The allegation is part of a motion filed on June 21 by legal representatives of the cryptocurrency exchanges in the US District Court for the District of Columbia.
“No convincing evidence”
The documents allege that the SEC’s June 17 claims, as described in a press release, were “misleading” and called on the financial watchdog to abide by “applicable conduct of business.” The filing specifically referenced SEC Enforcement Director Gurbir Grewal’s allegations that CZ and Binance could “coordinate customer assets or divert customer assets at will” and sent an order requiring all parties involved in the lawsuit to return to the United States.
Binance representatives fought back in the June 21 lawsuit, stating: “The SEC has no evidence that BAM [Binance.US] Customer assets have been wasted, misused or misused in any way.”
The filing further argued that the SEC’s press release “appears designed to create unwarranted confusion in the marketplace, which could harm rather than protect BAM customers.” It also risks infecting the jury with misleading descriptions of the evidence pertaining to the defendants.”
If approved by a federal judge, the motion could limit the SEC’s ability to make public comments about the Binance lawsuit throughout the course of the case, especially comments that “could materially impact legal proceedings.” As part of their argument, Binance’s legal team included excerpts from a June 13 hearing in which SEC counsel admitted there was no evidence that Binance.US assets were being funneled abroad.
The motion is part of the SEC’s broader lawsuit filed June 5 against Binance, Binance.US and CZ, alleging that they offer unregistered securities and fail to register as an exchange or a broker-dealer-clearing agency. At the time, SEC Chairman Gary Gensler alleged that CZ and Binance had misled investors about the robustness of their risk controls, with the regulator seeking disgorgement and other punishments.
The SEC wanted the court to freeze all of Binance.US’s assets, but a compromise was reached whereby only the exchange’s employees would have access to client funds during the lawsuit.
Editor’s Note: This article was written by an nft now contributor in collaboration with OpenAI’s GPT-4.