Binance Blasts SEC for Misleading Claims About Consent Order Agreement

Binance lawyers bashed the SEC statements as disappointing and misleading.

Binance Changpeng Zhao CZ looking angry at documents.
Created by Kornelija Poderskytė from DailyCoin
  • The SEC sued Binance earlier this month.
  • The security of Binance.US customer assets has risen as a major talking point in the case.
  • Binance has accused the SEC of making false claims about an agreement to secure these deposits.

Earlier in the month, the United States Securities and Exchange Commission sent shockwaves through the crypto industry by going after Binance, the world’s largest crypto exchange.

In the early stages of the case, the major contention has been the safety of deposits on Binance.US, the exchange’s U.S. affiliate, with the SEC initially moving to freeze the firm’s assets. 

Over the weekend, both parties agreed on securing these assets and avoiding a total asset freeze. But Binance has called out the SEC for allegedly misleading claims about the so-called consent order agreement in a recent court filing.

Binance Seeks Order to Compel SEC to Comply with Rules of Conduct

Immediately after the court approved the consent order on June 17, the SEC issued a statement asserting that it had secured “emergency relief” to secure the assets of Binance.US’ customers. In the press release, Director of the SEC Division of Enforcement Gubir S. Grewal claimed that Binance and its Chief Executive Officer Changpeng “CZ” Zhao “have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please.”

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In a court filing on Wednesday, June 21, Binance lawyers bashed the market regulator for these statements describing them as disappointing and misleading. The attorneys for the crypto exchange argued that the SEC’s comments in the press release were unfounded, highlighting that the regulators had conceded in court that they had no evidence that Binance had mishandled customer deposits.

The firm has urged the court to compel SEC attorneys to desist from making misleading statements outside the court in compliance with applicable rules of professional conduct.

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"The SEC's press release creates a risk of material prejudice to this proceeding," they argued, adding that it "served only to reinforce confusion and uncertainty among BAM's customers and banking partners."

The regulator alleges over $12 billion in Binance and Binance.US customer deposits were transferred to a Zhao-controlled entity from 2019 to 2021.

But per the transcript of the June 13 hearing over the SEC’s asset freeze request, the markets regulator had failed to provide evidence to support the claimed movement of customer funds.

"So currently the assets are not going offshore....[W]e're not seeing any flows of money outside of the United States," an SEC lawyer conceded at the hearing.

The consent order agreement requires Binance.US to maintain full control of U.S. customer deposits. In addition, it gives regulators oversight over the crypto exchange’s expenses.

On the Flipside

  • Experts have shared opposing views on the implications of the consent order agreement.
  • Binance.US has significantly beefed up its legal team for the lawsuit.
  • A former SEC enforcement chief has suggested that Binance will face criminal charges for money laundering.

Why This Matters

The SEC’s claims in the lawsuit have already significantly impacted Binance.US’ business. Binance lawyers argue that the SEC’s statements in the press release risk further damaging the firm and tainting the case.

Read this to learn more about the consent order agreement in the SEC case against Binance:

SECBinance.US Consent Order Agreement: Experts Disagree on Implications

Coinbase has scored a significant win in its rulemaking case against the SEC. Find out more:

Court Sides with Coinbase, Keeps Jurisdiction in SEC Rulemaking Case

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Okoya David

David Okoya is a crypto news reporter at DailyCoin based in Nigeria. He covers various topics related to the cryptocurrency industry, including exchanges, regulations, and price movements, and strives to bring fresh angles to breaking news. With experience as a freelance crypto news writer, David upholds the highest journalistic standards, telling complete stories and answering lingering questions whenever possible.