Binance Criticises The SEC Claims Of Mixing And Diverting Customer Assets

The Binance cryptocurrency exchange and its CEO, Changpeng Zhao, have criticized the claims made by the US Securities and Exchange Commission (SEC). The SEC had claimed that Binance mixed and diverted customer assets at the Binance US platform. Zhao has since dismissed these claims.

Binance CEO criticizes SEC over claims of commingling assets

The parties have since filed a motion at the district court in Columbia urging the court to order the SEC to remain compliant with the applicable rules of conduct around extrajudicial statements.

Last week, the SEC released a statement saying that the commission had obtained “emergency relief” to protect the assets owned by Binance US customers. In its statement, the SEC said that Binance, its CEO, and those operating the Binance US exchange had agreed to return the US-based assets held on behalf of those customers on the Binance US platform.

The Director of Division of Enforcement at the SEC, Gurbir S. Grewal, had claimed that the limitations that were imposed on Binance US and the operators of the exchange would ensure that customer funds are not commingled or diverted.

“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please, as we have alleged, these prohibitions are essential to protecting investor assets,” Grewal said.

Binance, its US affiliates, and Zhao have filed a new motion opposing the claims made by Grewal. It said that the SEC had previously admitted in court that there was zero evidence that the customer assets owned by BAM were not misused, commingled, and dissipated. They also said that the statement released by the SEC was disappointing and the action posed harm to Binance US clients.

The case between Binance and the SEC

Earlier this month, the SEC filed 13 charges against Binance, its CEO, and other affiliated entities. The commission claimed that Binance operated illegal trading platforms, provided customers access to unregistered crypto asset securities, and commingled the funds deposited by customers on the platform.

The SEC later filed another motion against Binance seeking to secure a temporary restraining order to freeze the assets owned by its affiliates. The SEC and Binance later agreed on a deal to prevent a total freeze of the assets owned by the exchange.

The SEC and Binance obtained approval from the court to sidestep an entire account restriction by making these funds to be only accessible to the employees at the Binance US platform. Customers will also be able to access their funds and make withdrawals at any time.

The US affiliates that were part of this agreement deal will also guarantee that none of the officials from the Binance Holdings platforms can access the private keys for the crypto wallets owned by customers. Binance US will also be mandated to create and transfer the funds owned by Binance US customers to wallets that only the US-based employees of the exchange can control.