The U.S. Securities and Exchange Commission (SEC) is challenging Binance, one of the world’s largest cryptocurrency exchanges, in a landmark court hearing. But Binance continues to fight back.
The SEC’s allegations of asset commingling and illegal operations by Binance.US and its CEO, Changpeng Zhao (CZ), faced intense scrutiny when the court demanded concrete evidence. To the surprise of many, the SEC admitted to having no proof of offshore asset movements, leaving the court bewildered.
The unfolding legal duel has sent shockwaves through the crypto community, exposing the SEC’s questionable tactics and igniting hope for the industry’s resilience.
Lmao @ Binance v. SEC #FireGensler
Court: "I want to know, are BAM assets going offshore? Is it happening or is it not? It's stunning to me that I've now asked this question to each of the SEC attorneys 5 times."
SEC: "So currently the assets are not going offshore… We're not… pic.twitter.com/QkEY5HM2ji
— Tree of Alpha (@Tree_of_Alpha) June 21, 2023
Court grills SEC on lack of evidence
During the closely watched court hearing, the SEC was repeatedly pressed to provide substantial evidence to support its claims against Binance.US. The court’s inquiries focused on specific allegations of assets moving offshore from the exchange, challenging the validity of the SEC’s concerns. The absence of supporting evidence casts doubt on the SEC’s allegations, highlighting potential weaknesses in its case.
The court’s persistent inquiries revealed the SEC’s lack of clarity, noted the court record, reflecting the growing skepticism towards the SEC’s claims. The regulator’s inability to substantiate allegations of asset commingling or diversion against Binance is fueling doubts regarding the legitimacy of its regulatory actions.
Crypto community reacts with frustration
Crypto enthusiasts reacted strongly to the revelations from the court hearing, expressing frustration with the SEC’s claims and fear-inducing tactics in the crypto market.
According to persons with knowledge of the matter, the hearing marks a pivotal moment. The SEC stands accused of a smear campaign against Binance. The lack of evidence presented in court gives hope for community members who believe that Binance can still triumph in the legal dispute.
NEW COURT DOCS: Binance swings back, dismantling SEC claims! Another big move in The Ongoing Legal Duel! 🥊
— Dan Gambardello (@cryptorecruitr) June 21, 2023
Questioning the SEC’s integrity, Binance stated in the filing;
“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.”
Binance’s legal team also argued that the SEC’s statements posed a risk of material prejudice to the ongoing proceedings, emphasizing the potential harm caused by its allegations.
Binance-US reaches a compromise with SEC
In its attempt to freeze Binance.US assets, the SEC filed a motion that led to negotiations with the exchange. Eventually, a compromise agreement was reached, granting only Binance.US employees access to client funds during litigation. Meanwhile, Binance made headlines by announcing the launch of a regulated cryptocurrency platform in Kazakhstan, signalling its determination to continue expanding despite the legal battle in the United States.
Further, Binance.US has taken steps to reduce its headcount, anticipating a protracted and costly legal case.
Let me provide some additional clarity via 🧵.
Binance is not cutting 20% of employees as a cost-cutting measure. @binance experienced true exponential growth these past 5 years — and grew its staff accordingly. This was a historic operational challenge to overcome. https://t.co/Awmh8PdT8j
— Patrick Hillmann (@PRHillmann) May 31, 2023
The decision reflects the cautious approach adopted by Binance.US in response to the ongoing SEC lawsuit, which alleges unregistered exchanges and the listing of unregistered securities by the company.
The SEC’s allegations
The SEC’s lawsuit, filed in early June, accuses Binance, BAM Management, BAM Trading, and Changpeng Zhao of operating unregistered exchanges and listing unregistered securities. The SEC further claims that the executives and the company were aware of the illegal nature of their conduct, citing internal conversations. However, the lack of concrete evidence during the court hearing so far is casting doubt on the validity of these allegations.