User Funds Safe, Assures Binance.US Amid SEC's Asset Freeze Move

The U.S. Securities and Exchange Commission (SEC) has taken action to freeze assets associated with Binance.US by requesting a temporary restraining order from the court. 

The court filing, submitted to the D.C. District Court, aims to secure approval for freezing assets linked to BAM Management US Holdings and BAM Trading Services, which are the holding and operating firms for Binance.US. 

This move comes after the SEC filed a lawsuit against Binance.US, Binance Global, and Changpeng Zhao, the founder and CEO of Binance, alleging various compliance and control failures. One of the claims made is that companies connected to Zhao had the ability to access funds belonging to Binance.US customers without their knowledge.

In its filing, the SEC emphasized the urgency of obtaining this relief to safeguard customer assets and prevent the dissipation of available assets for potential judgments. The SEC cited the Defendants' extensive history of non-compliant behavior, disregard for U.S. laws, evasion of regulatory oversight, and lingering concerns about financial transfers, as well as the custody and control of customer assets. The SEC further argued that certain Defendants, despite claiming to be beyond the jurisdiction of the court, were implicated in these matters, as outlined in the Complaint, Memorandum of Law, and accompanying materials.

Additionally, another filing seeks various orders, including an order to "show cause why a preliminary injunction should not be granted," an order directing defendants to repatriate assets held for BAM customers, and an order prohibiting the destruction of records by the defendants, among others.

If the court grants the restraining order, Binance will have a limited timeframe of five days to ensure that only Binance.US has access to customer funds. Furthermore, within 30 days, all customer assets would be transferred to new wallets that are exclusively accessible by Binance.US.

Binance.US, in a late Tuesday tweet, assured users that their assets remain secure and shared that their legal representatives have addressed the SEC's concerns regarding fund safety.

In a memorandum of law filed shortly after the request for the temporary restraining order, the SEC restated many of its arguments from the original lawsuit. These arguments included the claim that Binance had access to Binance.US funds and that both Binance and its founder, Zhao, had expressed intentions to evade U.S. regulatory oversight.

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