In a recent development, the U.S. Securities and Exchange Commission (SEC) has taken action to safeguard customer assets and prevent further potential risks by seeking a temporary restraining order to freeze assets associated with Binance.US. The SEC filed a request with the D.C. District Court, urging the court to grant the order and freeze assets linked to BAM Management US Holdings and BAM Trading Services, which are responsible for holding and operating Binance.US. This move comes as a part of the SEC's lawsuit against Binance.US, Binance Global, and Binance founder and CEO Changpeng Zhao, wherein the SEC has alleged multiple compliance and control failures, including unauthorized access to funds belonging to Binance.US customers by companies affiliated with Zhao.
In its court filing, the SEC emphasized the necessity of this relief in a timely manner, highlighting the need to protect customer assets and prevent the depletion of available assets due to the defendants' extensive history of non-compliance, disregard for U.S. laws, evasion of regulatory oversight, and the existence of unresolved concerns related to financial transfers and the custody and control of customer assets. The SEC stated, "The SEC respectfully submits that this relief is necessary on an expedited basis to ensure the safety of customer assets and prevent the dissipation of available assets for any judgment, given the Defendants' years of violative conduct, disregard of the laws of the United States, evasion of regulatory oversight, and open questions about various financial transfers and the custody and control of Customer Assets – including by Defendants who claim they are not subject to the Court's jurisdiction – as described in the Complaint, Memorandum of Law, and supporting materials."
Additionally, another filing by the SEC seeks several other orders, including an order to demonstrate why a preliminary injunction should not be granted, an order directing the defendants to repatriate assets held on behalf of BAM customers, and an order to prohibit the destruction of records by the defendants, among others.
If the court approves the temporary restraining order, Binance would be required to ensure that only Binance.US has access to customer funds within five days. Furthermore, within 30 days, all customer assets would need to be transferred to new wallets that are exclusively accessible by Binance.US.
The SEC's lawsuit, filed on Monday, already hinted at the possibility of a temporary restraining order, with the SEC stating its intention to seek preliminary injunctive relief, which may involve freezing assets and conducting a verified accounting.
According to the SEC's allegations, Binance allowed two companies connected to Changpeng Zhao, namely Sigma Chain and Merit Peak, to access substantial amounts of customer funds held by BAM Trading, totaling billions of U.S. dollars.
In response to these developments, Binance released a statement affirming the safety and security of user funds on Binance.US and other Binance-affiliated platforms. The statement reassured users that their assets are not at risk and expressed the company's strong commitment to defending against any allegations suggesting otherwise.
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