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Binance.US Defends Safety of Customer Assets, Rebuts SEC Allegations With Legal Action

2 mins
Updated by Kyle Baird
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In Brief

  • Binance.US fights SEC's request to freeze assets, saying it will halt operations and hurt customers.
  • The exchange hires former SEC official George Canellos to help win the legal battle.
  • Market depth down by 78% since the SEC lawsuit announcement, liquidity took a massive hit.
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Binance.US has asked the judge in its case with the SEC to reject the freezing of assets, saying it would severely affect the exchange. It also defended the safety of customer assets.

Binance.US made a legal filing on June 12, asking the presiding judge to reject the United States Securities and Exchange Commission’s (SEC) request to freeze the exchange’s assets. Binance stated that the order would significantly impact its business and hurt customers.

Binance.US Fights Back

The filing that the exchange made was blunt in its description,

“Operations would quickly grind to a halt. With a freeze of all corporate assets, banking partners would most likely cease to honor requests to transfer funds for any purpose, including customer redemptions.”

The fact that customers’ funds will be affected could have some weight. The SEC argued that the exchange violated securities laws for years, thus putting customers’ funds at risk. The freezing of assets could very well have the same outcome.

The SEC lawsuit targets Binance.US, the U.S. entity of the exchange, distinct from Binance global. Check out our guide on Binance vs. Binance.US to learn more:

Binance vs. Binance.US: A Detailed Comparison

The defense attorneys called the SEC’s request draconian. This is the general consensus among analysts at the moment, namely that the SEC and Chair Gary Gensler are taking a draconian approach to matters.

Hiring Former SEC Official

To win the legal battle against the SEC, Binance.US has hired a former SEC enforcement co-director, George Canellos. The latter is the global head of the litigation and arbitration group at Milbank, and Binance hired three others from the firm for the case.

It will certainly be useful to have Canellos’ skills at the moment. Binance.US has said that payments and banking partners have signaled that they will suspend support for all dollar channels on June 13.

Binance Sees 78% Decline in Market Depth

There are other reasons why Binance.US will have to ramp up its defense. The exchange’s market depth is down by 78% since the SEC lawsuit was announced. Closer inspection shows liquidity took a massive hit.

Change in Market Depth of Binance.US. Source: Twitter/Kaiko
Change in Market Depth of Binance.US. Source: Twitter/Kaiko

Market makers have flocked out of the exchange, instantly tanking market depth. Without sufficient liquidity, the exchange could face a significant uphill battle to get back to its old position — if it can survive the legal battle against the SEC in the first place.

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Rahul Nambiampurath
Rahul Nambiampurath's cryptocurrency journey first began in 2014 when he stumbled upon Satoshi's Bitcoin whitepaper. With a bachelor's degree in Commerce and an MBA in Finance from Sikkim Manipal University, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has helped DeFi platforms like Balancer and Sidus Heroes — a web3 metaverse — as well as CEXs like Bitso (Mexico's biggest) and Overbit to reach new heights with his...
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