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SEC requests asset freeze on Binance.US amidst lawsuit alleging compliance failures

SEC cracks down on Utah-based DEBT Box in crypto fraud scheme, freezing $50 million in assets

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TL;DR

  • The SEC has filed a lawsuit against Binance.US, Binance Global, and CEO Changpeng Zhao, alleging compliance and control failures.
  • The commission has requested a temporary restraining order to freeze assets tied to BAM Management US Holdings and BAM Trading Services, the holding and operating firms for Binance.US.

The U.S. Securities and Exchange Commission (SEC) has taken legal action against Binance.US, Binance Global, and Binance CEO Changpeng Zhao, filing a lawsuit that alleges a range of compliance and control failures. In a court filing on Tuesday, the SEC requested a temporary restraining order to freeze assets tied to BAM Management US Holdings and BAM Trading Services, the holding and operating firms for Binance.US. The SEC’s move aims to protect customer assets and prevent the dissipation of funds amid concerns about regulatory evasion and undisclosed financial transfers.

Ensuring customer safety and asset preservation

In its court filing, the SEC emphasized the necessity of expedited relief to safeguard customer assets. The regulatory body cited years of violative conduct, disregard for U.S. laws, and evasion of regulatory oversight by the defendants as reasons for seeking asset freezes. The SEC also raised questions regarding various financial transfers and the custody and control of customer assets, particularly those accessible to defendants who claim to be beyond the court’s jurisdiction.

The SEC’s motion included several additional requests, such as an order to show cause why a preliminary injunction should not be granted, a directive for defendants to repatriate assets held for BAM customers, and an order prohibiting the destruction of records. The SEC intends to obtain a verified accounting of the assets in question.

Potential impact on Binance’s operations

If the court grants the SEC’s request, Binance will have five days to ensure that only Binance.US can access customer funds. Furthermore, within 30 days, all customer assets must be transferred to new wallets that can only be accessed by Binance.US. The SEC’s actions highlight concerns about Binance’s compliance practices and its relationship with affiliated companies, Sigma Chain and Merit Peak, which allegedly had access to substantial customer funds held by BAM Trading.

Binance has yet to comment on the recent motion to freeze crypto assets. However, the exchange previously stated that user funds on Binance.US were never at risk, assuring customers of the safety and security of their assets. The legal battle between Binance and the SEC is ongoing, with the regulatory body seeking to enforce measures that it believes are necessary to protect investors and maintain regulatory oversight in the cryptocurrency space.

The SEC’s request for an asset freeze on Binance.US reflects its determination to ensure customer asset safety and prevent potential dissipation of funds. Also, the lawsuit filed against Binance raises serious allegations of compliance failures, highlighting the need for regulatory scrutiny in the rapidly evolving crypto industry. As the legal proceedings continue, the outcome of this case will have significant implications for the operations of Binance and the broader regulatory landscape surrounding digital assets.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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