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SEC seeks asset freeze for Binance US units in regulatory lawsuit
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The US government is trying to freeze two Binance unit assets after cracking down on the leading cryptocurrency exchange for reportedly evading regulatory oversight.
The Securities and Exchange Commission (SEC) says the BAM Management US Holdings and BAM Trading Services units, which Binance presented as independent entities, were controlled secretly by the parent company and its CEO, Changpeng Zhao.
In its motion to the federal court in the District of Columbia, the SEC said the freeze was necessary to safeguard customer assets at Binance's US operations.
Read More: SEC sues Binance for alleged illegal use of customer funds
It is due to the companies' "years of violative conduct, disregard for US laws, evasion of regulatory oversight, and unanswered questions regarding financial transfers and the custody of Customer Assets."
The initial complaint accused Binance of demonstrating a "blatant disregard of federal securities laws" and alleges the parent firm and Zhao had amassed billions of US dollars while exposing investors' assets to significant risk.
The SEC is seeking the disgorgement of all ill-gotten gains from Binance and the payment of civil penalties without specifying the amounts.
Read More: Coinbase hit with SEC lawsuit as crypto crackdown intensifies
In response, Binance.US reassured users on Twitter their assets remained safe and secure.
It said: “The filing of the preliminary injunction is unwarranted and based more on the SEC Staff obtaining an advantage in litigation versus genuine concern about the safety of customer assets.”
On Monday, June 5, the Binance parent refuted the charges in the initial complaint its Binance-branded cryptocurrencies were securities.
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It said SEC's actions attempted to assert jurisdictional authority over other regulators, likely referring to the agency's ongoing conflict with the Commodities Futures Trading Commission.
Coinbase, a rival cryptocurrency exchange, also faced a lawsuit from the SEC on the same day, alleging its failure to comply with US securities registration rules.
These recent actions against Binance and Coinbase signal an intensified regulatory crackdown on the cryptocurrency industry.
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