Binance argues SEC has no evidence of commingling in new court docs

Binance says the SEC contradicted its own statements about the crypto company commingling customer assets


Grey82/Shutterstock modified by Blockworks


Attorneys for Binance on Monday took aim at the SEC, claiming the regulator contradicted its allegations regarding asset commingling because it told the court it “has no evidence of that ever occurring.”

Binance’s legal retort was filed in a new court motion, alongside BAM Management, BAM Trading and CEO Changpeng Zhao. 

The defendants have asked the court overseeing the SEC’s lawsuit against the crypto company to ensure the regulator complies with the “applicable rules of conduct.”

The motion comes after the June 13 hearing for the SEC’s temporary restraining order that would have affected exchange assets. When the SEC filed for a TRO, it originally sought to freeze the assets of Binance.US operators BAM Management and BAM Trading. 

The judge pushed both parties to find a middle ground

The defendants argued the court asked the SEC’s counsel whether there was evidence of the commingling of customer assets.

“SEC attorneys initially failed to provide answers responsive to the Court’s question, but they eventually confirmed what Defendants argued in their opposition briefs—there is no evidence that BAM customer assets have been misused or dissipated,” the filing said. 

Binance has denied claims of asset commingling

According to transcripts included in the documents filed Wednesday, the court also asked the SEC to prove Binance.US was moving money offshore. 

In response, the SEC’s attorneys said, “So currently the assets are not going offshore…We’re not seeing any flows of money outside of the United States.”

Following the hearing, the SEC withdrew its request for a total asset freeze and both parties were able to reach a deal to prevent the issuance of a TRO.

Allegations ‘unsupported by evidence,’ Binance says

Binance also noted the SEC’s statement regarding the lawsuit “contains statements that the SEC knows to be unsupported by evidence, and is inconsistent with the rules of professional conduct.”

The SEC’s Gurbir Grewal previously in a statement said that Zhao and Binance “have been able to commingle customer assets or divert customer assets as they please.” That setup, according to Grewal, made the request “essential to protecting investor assets.”

Read more: Crypto creates ‘perfect storm of investor risk’: SEC enforcement director

“The SEC’s press release is misleading, contains statements that the SEC knows to be unsupported by evidence, and is inconsistent with the rules of professional conduct,” the Binance filing states. 

The legal team for Binance and the operators of Binance.US also argued that the SEC’s statement “creates a risk of material prejudice to this proceeding.”

Binance.US has already moved to reduce its headcount, citing the potential for a lengthy and costly legal battle. 

The SEC sued Binance in early June, alleging that the crypto company, alongside BAM Management, BAM Trading, and Zhao were operating unregistered exchanges as well as listing unregistered securities. It also cited internal conversations and claimed that executives and the company “knew that their conduct…was illegal.”

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