Binance Counters SEC’s TRO Request, Accusing Commission of Fabricating Emergency

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Binance, in response to the U.S. Securities and Exchange Commission’s (SEC) temporary restraining order (TRO) request, vehemently denied any risk to customer assets and dismissed the notion of an “emergency.” The exchange’s legal team asserted that the SEC had manufactured the emergency for its own purposes.

Questioning Timing and Urgency: Binance Responds to SEC’s TRO Bid

Approximately a week ago, the SEC sought court approval to freeze Binance US’s assets, the U.S. subsidiary of Binance, in order to safeguard customer assets. On June 12, Binance opposed the TRO request, assuring that there was no urgent situation and that customer assets remained secure.

Binance’s legal team raised concerns regarding the SEC’s actions. They questioned why the SEC allowed platforms like Binance to grow to their current size if their operations were always illegal. Furthermore, the lawyers highlighted that the SEC filed a lawsuit against Coinbase the very next day, prompting them to ask why the SEC chose this particular moment to act. They argued that the request for a TRO was unwarranted and improper, based on unfounded and subjective worries of the SEC’s staff.

SEC’s Authority and Lack of Crypto Asset Definitions

In their court filing, Binance’s lawyers clarified that the case alleged registration violations against Binance Holdings Limited (BHL) and control person liability for registration violations against Mr. Zhao, the CEO. They emphasized that the SEC failed to provide evidence of mishandling or misuse of customer assets by Binance. The lawyers contended that the SEC’s charges against BHL and Mr. Zhao, focusing solely on failure to register, did not justify the drastic remedies sought by the SEC.

Furthermore, Binance argued that the SEC lacked the authority to require registration when there was no clear definition of crypto assets as securities under federal securities laws. They pointed out that the absence of a proper definition had led to intense debate and extensive legal proceedings across the nation.

Aligning With Industry Concerns

Binance’s stance aligned with concerns raised by other cryptocurrency enterprises, highlighting the need for the U.S. government to establish a clear distinction between crypto assets as securities or commodities. While SEC Chair Gary Gensler acknowledged that bitcoin (BTC) did not fall under federal securities laws, he believed that most contemporary crypto assets should be classified as securities. However, specific instances of the SEC designating certain assets as investment contracts were only evident through enforcement actions.

Binance’s lawyers explained that if the SEC failed to establish the requirement for registration, it could not succeed in its claims for various types of registrations. They emphasized that the SEC’s case lacked merit without this crucial foundation.

Proposed Consent Order and Communication with the SEC

Despite opposing the TRO request, Binance’s legal team expressed openness to a proposed consent order (PCO). The PCO would involve Binance US refraining from transferring assets to its parent company or any other entities. It would also facilitate accounting and expedited discovery, and Binance would provide all private and administrative keys to the government as a gesture of good faith. Binance stated that it had been in communication with the SEC since 2021 but was unaware of being targeted until February 2023.

Opinions on Binance’s Legal Battle with the SEC

What are your thoughts on Binance’s ongoing legal battle with the SEC? Do you believe the SEC’s claim of an emergency is justified, or do you think it was manufactured for its own purposes?

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• Binance Fires Back at SEC’s TRO Request
• Binance Questions SEC’s Timing and Urgency
• SEC’s Legal Battle with Binance
• Binance’s Arguments Against SEC’s Authority
• Binance’s Proposed Consent Order
• Binance’s Communication with the SEC