A proposal was made by lawyers Represent Binance.US, Binance Holdings Limited (the global stock exchange), and Binance CEO Changpeng “CZ” Zhao. The petition alleges that the US Securities and Exchange Commission (SEC) made misleading statements regarding an ongoing securities lawsuit.
According to the attorneys, the SEC’s statements led them to believe that the SEC misled the public about the case. Attorneys representing Binance.US, Binance Holdings Limited, and CEO Changpeng “CZ” Zhao recently filed an application in the US District Court for the District of Columbia.
The motion asserts that the SEC’s press release on June 17 contained “unsubstantiated” and “non-compliant with professional conduct” statements.
The legal team argues that the SEC’s statements in the press release lack evidence and are not in line with accepted standards of professional conduct.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, stated:
Since Changpeng Zhao and Binance control the assets of the platform’s customers and have been able to mix customer assets or transfer customer assets as they wish, as we have claimed, these prohibitions are necessary to protect the assets of investors.
With regard to Grewal’s statements, the suit asserts that the SEC has not presented any evidence to support claims that the exchange engaged in commingling of clients’ assets or transferred those assets at its discretion. The lawsuit challenges the SEC’s assertions by highlighting a lack of evidence in this regard.
The implications of the SEC losing this move against Binance.US
The motion argues that the SEC’s press release appears to have been drafted with the intent of creating undue confusion within the market. Such confusion could harm Binance.US and its clients instead of providing them with protection.
In addition, the motion also claims that the press release runs the risk of harming the potential juror pool by providing misleading descriptions of the evidence related to the defendants involved in the case.
Binance has also accused SEC Chairman Gary Gensler of having a conflict of interest. They claim that Gensler had previously sought an informal advisory role with the exchange prior to his appointment as SEC chairman.
This allegation indicates that Gensler’s past association with Binance could influence his decisions and actions as head of the regulatory agency.
If a federal judge approves the order, it could restrict the SEC from issuing specific public statements about Binance’s lawsuit during the case, as such statements could have a significant impact on court proceedings.
The crypto platform’s legal team provided an excerpt from a transcript of a hearing on June 13, in which SEC attorneys acknowledged that there was no evidence regarding the assets from Binance. The suggestion is part of its ongoing defense strategy in response to the lawsuit filed by the Securities and Exchange Commission, which began on June 5.
The lawsuit is just one of several regulatory actions the platform has faced in recent months, as regulators around the world have stepped up scrutiny of the cryptocurrency industry.
Featured image from Bloomberg, chart from TradingView.com
