SEC Requests Asset Freeze for Binance.US Amid Lawsuit

In its legal action against Binance.US, the U.S. Securities and Exchange Commission (SEC) is requesting a temporary restraining order to freeze assets connected to the exchange. In the Monday-filed SEC action, several compliance and control violations, including illegal access to user assets, are cited against Binance.US, Binance Global, and CEO Changpeng Zhao. Assets connected to BAM Management US Holdings and BAM Trading Services, the holding and operational companies for Binance.US, are asked to be frozen in the court complaint. The SEC contends that this action is required to safeguard consumer assets and stop money from being lost.

Asset Freeze and Other Orders Sought

In its court petition, the SEC is requesting a number of further measures in addition to the asset freeze. A preliminary injunction should not be granted, assets held for BAM customers should be returned, the defendants cannot destroy records, and other requests are among them. If approved, Binance would have five days to ensure that only Binance.US could access customer cash. Additionally, all user assets would have to be moved within 30 days to brand-new wallets that are solely under Binance.US’s authority.

Binance.US Claims User Funds Are Safe

Through a tweet, Binance.US assured its users that their valuables are still protected. The exchange said that the SEC’s concerns about fund safety have been addressed by its lawyers. In contrast, the SEC’s memorandum of law filing raised doubts about BAM Trading’s capacity to handle the assets with due care. It emphasized that official policies for safeguarding cryptocurrency assets had only been introduced by BAM Trading last month, raising concerns about its custodial procedures.

SEC Allegations and Binance’s Response

According to the SEC’s complaint, Binance permitted Sigma Chain and Merit Peak, two businesses linked to CEO Changpeng Zhao, to access large sums of customer assets stored by BAM Trading. User funds on Binance.US were never in danger, according to Binance’s denial in response to the lawsuit. The exchange stressed the safety and security of user funds on platforms operated by Binance and its affiliates, and it vowed to vehemently deny the accusations.

Protecting Investor Assets

The SEC’s legal action against Binance.US serves as a reminder of how crucial investor safety and regulatory compliance are in the cryptocurrency sector. It will become clearer as the case develops what exactly the alleged compliance and control problems with Binance.US were. The verdict in the lawsuit will have repercussions for the larger cryptocurrency industry, highlighting the necessity for exchanges to put customer asset protection first.