The United States Securities and Exchange Commission (SEC) is moving to freeze the assets of Binance and several of its affiliated entities operating within the country according to a court document filed earlier today.
In the petition, the SEC is asking the court to freeze the assets of BAM Management and BAM Trading – two of the companies used by Binance to operate in the country despite not being lawfully registered as a securities exchange.
In addition, the agency is demanding that all assets belonging to customers of BAM are repatriated to the US and to prohibit the destruction of accounting and financial records belonging to these companies.
Binance Could Try to Transfer its Assets Out of the Country
It is the SEC’s belief that Binance could attempt to transfer the assets belonging to BAM to jurisdictions outside of the control of the agency to protect them from being frozen or otherwise confiscated by the latter.
The court granted the motion meaning that all financial institutions, brokerage firms, and other similar entities that hold deposits, assets, and other similar resources for the entities mentioned earlier must immediately prevent officials and executives from the companies from accessing and transferring the funds to other accounts.
In addition, the agency is asking Binance to move customers’ assets to new crypto wallets and to hand over the private keys to the regulatory body to ensure that the assets remain protected during the legal proceeding and outside of the control of Changpeng Zhao – Binance’s founder and CEO – and other executives within the company.
This legal procedure comes just a day after the SEC filed a complaint against Binance that accuses the company, many of its subsidiaries, and its founder of operating illegally in the country as an unregistered securities dealer, offering unregistered securities, and manipulating market prices.
Crypto Enthusiasts Deem This Recent Attack on Exchanges a Move Against Crypto
Hundreds of Twitter accounts have backed the founder of what is arguably the world’s largest crypto exchange and argue that the SEC’s latest attack on Binance and more recently on Coinbase (COIN) are not just a war against exchanges. Instead, they claim it is a full-blown campaign against crypto as a whole.
Clarification: this could only affects https://t.co/hSHrrlF7o7, IF granted by the court.
— CZ 🔶 Binance (@cz_binance) June 6, 2023
CZ has been actively retweeting the comments of several die-hard crypto enthusiasts and supporters of the cause. Meanwhile, Binance responded to the SEC’s proceeding against the company with a long statement claiming that the agency’s actions are disappointing as they have been cooperating with the regulator for years to “answer their questions and address their concerns”.
The statement called this recent legal action a unilateral move and called out the SEC for its lack of clarity when it comes to providing appropriate guidance to exchanges so they can comply with the agency’s regulations on the subject.
“Today’s action is another in a line of examples where, as with other crypto projects facing similar suits, the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology”, the exchange’s statement reads.
Aside from Binance, Coinbase is also being targeted by the SEC with similar allegations that they are operating unlawfully as an unregistered securities exchange while offering unregistered securities via its crypto staking program.
An official from Coinbase was scheduled to testify in Congress today about a proposed regulation for the sector that most companies in the space have been asking for years already.
The SEC’s hostile and unilateral appear to be indicative that the agency is not in favor of letting crypto exchanges operate freely in the United States until they are appropriately regulated. Instead of waiting for the regulation to come out, they are resorting to enforcement actions by using existing securities laws that exchanges claim cannot be applied to digital assets due to their different and rather unique nature.