- The SEC moved to freeze Binance.US assets last week.
- The court recently held a hearing on the matter.
- The hearing gives a glimpse of what to expect from the thrilling case.
For several reasons, the United States Securities and Exchange Commission case against Binance, the world’s largest crypto exchange, is poised to become one of the most followed civil cases in crypto history.
As the case builds momentum, one issue that has dominated discussions is the SEC‘s move to freeze Binance.US assets. A recent hearing into the matter ended with some positives for Binance while also giving valuable insight into the leaning of the judge and what compromises both parties are willing to make.
The Key Takeaways
At the Tuesday, June 13 hearing, Judge Amy Berman Jackson convinced Binance.US and the SEC to work towards a compromise that prevented a total asset freeze, instructing them to provide an update on negotiations by Thursday, June 15, per a Bloomberg report.
She notably agreed with Binance.US lawyers that the chosen measure should allow the exchange to continue to operate.
“Shutting it [Binance.US] down completely would create significant consequences not only for the company but for the digital asset markets in general,” Judge Jackson reportedly asserted, even as she asked Binance.US to submit a list of its business expenses on Wednesday, June 14.
Pro-crypto securities lawyer James “MetaLawMan” Murphy notably described the outcome of the hearing as a win for Binance, suggesting that Judge Jackson believed “that there was no actual emergency” contrary to the SEC’s arguments.
But despite this perceived win, it is worth noting that Judge Jackson did not appear to significantly lean in any direction, as both sides received a fair share of scolding.
For one, she expressed displeasure with the SEC’s regulation by enforcement approach in the crypto markets, calling it “inefficient and cumbersome,” per a New York Times report. At the same time, she expressed that she was not impressed by the claims of surprise enforcement from Binance lawyers, arguing that regulators have raised the issues at the center of the lawsuit for years.
On June 5, the SEC rocked the crypto markets by filing 13 charges against Binance, Binance.US, and Binance founder Changpeng “CZ” Zhao.
By June 6, the regulator moved to freeze Binance.US assets citing allegations in its initial complaint that Binance had a habit of commingling and mishandling customer deposits raising concern that it could move U.S. customer deposits out of the court’s jurisdiction.
In a court filing on Monday, June 12, Binance.US lawyers had asserted that they were open to a compromise that allowed the transfer of customer deposits to new crypto wallets solely controlled by staff of the U.S.-based entity. But they maintained that a total freeze would crash the business and prevent it from defending itself in the lawsuit.
On the other hand, during the recent hearing, an SEC lawyer reportedly suggested that the commission was open to a “narrowly-tailored exception” to the requested temporary restraining order that allowed the exchange to operate.
On the Flipside
- If both sides fail to agree, the judge will be forced to issue a ruling on the motion to freeze Binance.US assets.
- Binance.US has already lost a banking partner due to the SEC lawsuit.
Why This Matters
The hearing gives the first glimpse of what to expect in what could be a drawn-out legal battle between the financial regulator and the crypto exchange.
Read this to learn more about the SEC’s move to freeze Binance.US assets:
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