New Development in SEC Case Against Binance

There has been a new development in the case filed by the US Securities and Exchange Commission (SEC) against Binance and CEO Changpeng Zhao. Eeon, an organization, has applied to the court to intervene in the lawsuit on behalf of customers.

Third Party Wants to Intervene in SEC’s Lawsuit Against Binance

Last month, the US regulatory agency SEC filed a lawsuit against Binance Global, Binance.US, and CEO Changpeng Chao (CZ), alleging 13 charges, including misleading investors and violating securities laws. According to an application made to the District Court for the District of Columbia, Eeon, a Nevada-based legal entity, has applied to intervene in the lawsuit between SEC and Binance on behalf of exchange customers. The application petition states that SEC and Binance lawyers are acting in their own interests and none of them are defending the customers of the exchange:

Since we are defined as “customers” by the court, we are the most appropriate party in this matter. We are not just any “customers” because we are the shareholders, investors, and owners of the cryptocurrencies held by Binance and its subsidiaries, and we believe that our interests have not been taken into account.

Eeon argues that cryptocurrencies are commodities since they are used for personal use and cannot be commercially traded as securities. According to the organization, since there is no regulation for new types of commodities, SEC does not have any jurisdiction over cryptocurrencies.

Regarding Binance, Eeon argues that the fact that the keys to the cryptocurrencies are held by the exchange and stopping withdrawals without proper notification unauthorizedly blocks access to the cryptocurrencies. The organization accuses the US SEC of worsening the situation rather than protecting investors and accuses them of money laundering. Additionally, the court was requested to allow customers to access their frozen funds on the platforms.

Another notable detail in the petition submitted to the court is the assertion that moving funds in Binance to offshore jurisdictions is a common practice and cannot be considered as money laundering. The petition noted that it is a common practice for online retailers, freelance service providers, consulting firms, small export companies, and travel agencies to transfer money abroad and these transactions are not considered as money laundering:

The court mentions how our funds and wallets are held and how Binance.US mixes funds from its overseas subsidiaries with funds coming from the US. While there is nothing illegal in such activities by themselves, the transfer of funds to offshore countries is a common practice and this practice is not considered as money laundering.

Customers Demand Compensation from Binance and US SEC

On the other hand, in the counter lawsuit filed by Eeon, it is requested that compensation be paid by Binance and the US SEC for the customer funds withheld, amounting to 20% of their value, with daily compound or a total of one thousand dollars per customer. It is demanded that the US regulatory agency and Binance and its subsidiaries share equal responsibility in paying fines, with the SEC being fined 500 dollars and Binance and its subsidiaries being fined 500 dollars.

According to the organization, the US SEC’s actions, despite not having sufficient evidence and clear authority to regulate cryptocurrencies, by filing a lawsuit against Binance and Binance.US that would affect the daily activities of customers who have invested in the exchange and cryptocurrencies for a long time, have caused them to suffer.