Binance.US filed a motion on June 21, asserting that the SEC lacks evidence to support its claim of commingling users’ funds on the crypto exchange.
Over the past few years, the Binance cryptocurrency exchange has made significant strides in various global markets, including the United States. However, regulatory scrutiny and competition from other exchanges have posed challenges to Binance’s market share, particularly following the collapse of FTX and Alameda Research, which impacted institutional investors and retail traders.
In the United States, Binance is currently engaged in a legal battle with the Securities and Exchange Commission (SEC), accused of listing unregistered securities and offerings. Binance and its legal team vehemently denied the SEC’s allegations and even leveled accusations of a conflict of interest against Chairman Gary Gensler.
Additionally, Binance.US alleged that Gensler had once applied for an informal adviser position with the exchange before assuming the role of SEC chair.
Binance and Its Legal Team Dispute SEC’s Claims
According to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, Binance and its CEO Changepeng Zhao (CZ) commingled users’ assets at will, thus putting investors at risk of losing their funds.
“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please, as we have alleged, these prohibitions are essential to protecting investor assets,” Grewal noted.
In the initial file charges on June 5, Gensler noted that CZ and Binance engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law. As a result, the SEC filed thirteen charges, against Zhao and Binance entities.
However, Binance and its legal team – in a June 21 filing in the US District Court for the District of Columbia – allege that the SEC issued misleading statements regarding the handling of customer assets. While referring to Grewal’s statements, Binance, and its legal team highlighted that the SEC has no evidence that the exchange commingled customers’ assets or diverted the assets at will.