3 - 4 minute read
The U.S. Securities and Exchange Commission (SEC) has recently filed a lawsuit against Binance and Binance.US, alleging that the companies were operating as an unregistered securities exchange, brokerage, and clearing agency. The lawsuit also claimed that there was massive commingling of funds that allowed Binance founder, Changpeng “CZ” Zhao, access to Binance.US customer assets. However, the federal judge overseeing the case has declined to order a temporary restraining order freezing the U.S. trading platform’s assets.
Judge Amy Berman Jackson of the D.C. District Court stated that if the SEC and Binance.US can agree on limits, “there’s absolutely no need” for a restraining order. In the meantime, the judge ordered Binance.US to provide a list of its business expenses to the court and ordered the parties to continue negotiating. A status update is due by the close of business Thursday.
During the hearing, the judge questioned SEC attorneys about their motion to freeze all of Binance.US’s assets until it could prove that no one from Binance’s global platform had access to its private keys. While the judge hinted that she may have been inclined to grant some sort of restriction on Binance’s access to Binance.US assets, she ultimately stated that the two parties were not that far apart and that finding an agreement would give all parties time to properly sort through the case’s details.
The judge also dove into the foundational question at the heart of the suit: What makes a crypto asset a security, and is it a commodity if it isn’t a security? Though the judge asked some elementary questions about the issue, she was not satisfied with the answers.
The SEC has alleged that Binance and Binance.US were operating as unregistered securities exchanges, while Binance has pushed back against the claims. Binance.US representatives have said that they mainly want to be allowed normal operating expenses and that they were “not willing to accept the death penalty” represented by a total asset freeze.
The Bottom Line
Despite the ongoing lawsuit against Binance and Binance.US, the federal judge overseeing the case has declined to order a temporary restraining order freezing the U.S. trading platform’s assets. If the two parties can agree on limits, there will be no need for a restraining order. However, the judge questioned the SEC’s motion and the definition of crypto assets as securities or commodities. Traders should pay attention to the ongoing negotiations and the potential impact on the asset’s value.