The Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, the cryptocurrency exchange, Binance.US (BAM), and its CEO Changpeng Zhao (CZ). In response to SEC’s request, the crypto exchange argued in its court filing that complying with the regulator’s demand to interview its executives and conduct further investigations would be burdensome and excessively broad, as there is insufficient evidence to support the allegations of customer fund misuse.
Key Details from Binance’s Response to the Lawsuit
Binance, in its response to the lawsuit, stated that “Even after all the discovery currently produced by BAM in the accelerated discovery period, the SEC has been unable to produce any evidence supporting its baseless allegations implying that customer funds were misused. All evidence on this topic (including documents, statements, and sworn testimony of witnesses) supports the fact that BAM did not use customer funds for its own purposes.”
Binance further emphasized in its court filing that complying with the SEC’s request to interview its executives and conduct further investigations would be burdensome and excessively broad, as there is insufficient evidence to support the allegations of customer fund misuse.
In June, the SEC alleged that Binance CEO CZ and Guangying ‘Helina’ Chen transferred billions of dollars of customer funds to their personal accounts through intermediary firms, based on the testimony of an SEC accountant. At the time, both Binance and CZ vehemently denied all allegations. BAM confirmed in its response filing that CZ does not have custody or control over the private keys of customer funds on the exchange.
BAM questioned the scope of the SEC’s demands in its latest court filing, including documents related to the exchange’s custody software and wallet solutions. The crypto exchange added, “SEC has not explained why the statements of BAM’s CEO and CFO fall within the scope of a Consent Order. The burden imposed by these statements far outweighs any potential benefits, and the request for further investigation is disproportionate to the needs foreseen by the Consent Order.”
Court Rejects Freezing Assets of Binance.US
Previously, the SEC requested the freezing of assets on Binance.US, which was denied by the presiding judge. The judge ordered both parties to engage in ongoing negotiations regarding their operations.
