SEC says Binance, CZ ‘doubled down’ on illegal activity

The temporary restraining order is necessary because the defendants “knew that their conduct…was illegal,” the SEC says

article-image

Aleksandr Khmeliov/Shutterstock modified by Blockworks

share

The SEC continues to pursue a temporary restraining order which seeks to freeze the assets of BAM Trading and BAM Management — the entities operating Binance.US.

“At present BAM Trading states that it holds $2.2 billion in crypto assets (as well as hundreds of millions more in fiat currency) belonging to investors who have entrusted BAM Trading to custody those assets on the Binance.US platform,“ the SEC said in its latest filing

The original temporary restraining order, which was filed on Tuesday, June 6 has not been granted by the court yet. 

Outside of freezing the assets of Binance.US, the commission wants to ensure that “relevant documents” are not destroyed or tampered with and ensure that BAM Trading complies “with specified relief concerning the custody and control of customer assets, and refrain from transferring them other than in the ordinary course of business, provided such ordinary course transfers are not made to any entity or person affiliated with Binance or Zhao.”

The SEC goes on to say, “Zhao has deliberately engaged in concerted efforts to provide a crypto asset platform for U.S. investors while shunning the applicability of U.S. law to protect securities investors.”

The SEC believes that the temporary restraining order is necessary because the listed defendants “knew that their conduct with respect to U.S. investors was illegal and risked U.S. government enforcement actions. Instead of ceasing such illegal activity, Zhao and Binance doubled down.”

Since the SEC asked for the order, it’s filed transcripts of conversations with ex-Binance.US CEOs and previous auditing — backing up the SEC’s claim that Binance commingled company and customer funds. 

Binance has denied that it commingled funds

The commission is also looking to serve Binance CEO Changpeng “CZ” Zhao and Binance via alternative means due to previous comments and the lack of a known Binance headquarters.

In the filing, the SEC quotes Zhao as “dismissing such ‘traditional mentalities’ [of a known headquarters] by saying ‘what kind of horse is a car? So you have to have an office. Wherever I sit is going to be the Binance office. Wherever, wherever I meet somebody is going to be the Binance office. ‘You have to have an entity. You have to have a headquarters. You have to have a bank account.’ All those things [don’t] have to exist for blockchain companies.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (6).png

Research

In recent months, a number of highly accretive developments were implemented across the protocol to improve fee capture, expand product functionality, and ultimately drive value accrual to the RUNE token, with more upgrades on the immediate horizon. These developments include hiking the minimum swap fee parameter to increase revenue, adding a Burn System Income Lever to reduce the RUNE supply, the addition of COSM-WASM smart contracting and IBC to enable an application layer, new chain integrations, and more.

article-image

A repayment plan has officially been approved, nearly two years after FTX went bust

article-image

Coinbase filed an interlocutory appeal in its case against the SEC earlier this year

article-image

FTX “never had the crypto” to make in-kind distributions, witness says at FTX’s confirmation hearing

article-image

Lucid Ventures co-founder Meta said they don’t think Solana is “abnormal” in the VC world, where it’s “standard” for many projects to fail

article-image

Plus, Polymarket hits all-time highs in daily trading volumes

article-image

Bitcoin is now in the second half of its bull market, if the previous ones are anything to go by