Binance.US, Binance Holdings Limited, and Binance CEO Changpeng Zhao have accused the Securities and Exchange Commission (SEC) of misleading the public through statements during its ongoing lawsuit.
The allegation was made during a motion filed by lawyers representing Binance.US at the United States District Court for the District of Columbia on the 21st of June.
SEC Deliberately Misleading The Public
According to the arguments filed by lawyers representing Binance.US, the United States Securities and Exchange Commission’s assertions made during a press release on the 17th of June were misleading, and appealed to the financial regulator to adhere to the “applicable rules of conduct.” In its press release, the SEC accused Binance and CEO Changpeng Zhao of commingling customer assets.
“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.”
The motion filed alleges that the Securities and Exchange Commission’s press release included statements that were unsupported by evidence and lacked substantiation. The lawsuit also stressed that the Securities and Exchange Commission presented no evidence to support its claims that Binance had commingled customer funds or diverted them as per its discretion. Binance representative stated,
“The SEC has no evidence that BAM [Binance.US] customer assets have been dissipated, commingled or misused in any way.”
It also alleged that the Securities and Exchange Commission’s press release was designed to introduce further unwarranted confusion into the crypto markets, having a detrimental impact on BAM customers.
“SEC’s press release seemed designed to introduce unwarranted confusion into the marketplace, which could have the effect of harming BAM customers rather than protecting them. It also risks tainting the jury pool with misleading descriptions of the evidence concerning the Defendants.”
Implications Of The Motion
The motion filed against the SEC also stated that its press release risked prejudicing the jury pool by misleading descriptions of events related to the defendants in the case. Binance had also accused the Securities and Exchange Commission Chair Gary Gensler of having a conflict of interest, alleging that Gensler had sought an informal advisory role with Binance before he was appointed as the SEC chair. According to Binance’s lawyers, Gensler’s previous connection with the exchange could influence his actions and decisions as the head of the SEC.
If the federal judge approves, the motion could have significant consequences for the SEC. For starters, it could limit the regulatory body’s ability to make public comments about the Binance lawsuit throughout the duration of the case, in particular, any comments that may impact court proceedings. To support their argument, Binance’s legal team also included some excerpts from a hearing held on the 13th of June. During this hearing, the SEC counsel admitted that there was no proof yet that Binance.US assets were being channeled overseas. The motion filed by the defense lawyers is part of its defense strategy in response to a lawsuit filed against Binance by the Securities and Exchange Commission on the 5th of June.
The Lawsuit Against Binance
The lawsuit filed by the Securities and Exchange Commission against Binance, Binance.US, and Binance CEO Changpeng Zhao accuses them of failing to register as an exchange or a broker-dealer clearing agency and offering customers unregistered securities. SEC Chair Gary Gensler also accused Binance of misleading its investors regarding their risk controls. Furthermore, the SEC also moved the court to freeze all assets belonging to Binance.US before reaching a compromise where only employees of the exchange could access client funds for the duration of the lawsuit.
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