Binance Spars With U.S. Regulators Over Asset Freeze

A federal judge Tuesday called on the Securities and Exchange Commission to come up with a compromise with global crypto exchange Binance to allow it to continue operating in the United States as it battles a civil fraud lawsuit filed by regulators. rice field.

The SEC last week accused Binance and its U.S. affiliates of mishandling customer deposits and lying to regulators. It also sought a freeze on the company’s U.S. assets, claiming that this would force Binance to shut down in the U.S.

At a hearing in Washington on Tuesday, U.S. District Court for the District of Columbia Judge Amy Berman-Jackson called on the two countries to discuss a possible agreement over an asset freeze, saying they were close to an agreement. Stated. their court filings suggest. Judge Jackson ordered negotiations to continue and provide an update by Thursday.

She also expressed skepticism about the SEC exercising its enforcement powers to regulate the world of cryptocurrencies, calling it “inefficient and cumbersome.”

The move against Binance is part of an ever-increasing regulatory crackdown on the cryptocurrency industry. A day after filing the lawsuit against Binance, the SEC also sued Coinbase, the largest U.S. exchange, for trading unauthorized securities.

The one-two punch shook the industry and sparked fears of a multi-year legal battle over the future of cryptocurrencies in the United States. The FTX exchange has come under increased scrutiny since November, when it collapsed overnight and criminal charges were filed against founder Sam Bankman-Fried.

Still, the effort to freeze Binance’s U.S. assets stands out as one of the SEC’s most aggressive actions against cryptocurrency companies to date. Previous measures have forced smaller cryptocurrency companies to pay fines and suspend certain products, but a victory over Binance would force the world’s largest exchange to leave the country entirely, prompting an outflow of companies. may accelerate.

Binance’s U.S. subsidiary, Binance.US, said in a court filing on Monday that the SEC’s proposed asset freeze would prevent the company from paying its vendors, employees and suppliers and put its business to a “rapid halt.” claimed to be.

At the hearing, a lawyer for Binance US said it would not accept the death penalty eight days after the incident.

Carl Tobias, a professor at the University of Richmond Law School, said the request to freeze the assets may have been intended to send a message to the broader crypto industry. “This is part of reaffirming the SEC’s ability to regulate in this area,” he said.

Binance.US oversees $2.2 billion in cryptocurrency holdings, according to SEC

Last week, the SEC revealed that it had been investigating Binance since the summer of 2020. A few months ago, regulators notified Binance that they were considering filing an enforcement action against the company.

After the SEC sued Binance last week, Binance-US said its partner banks would no longer offer a significant payment channel, forcing the exchange to stop offering transactions in U.S. dollars.

In court documents, the SEC said none of the company’s moves came as a surprise to Changpeng Chao, the company’s chief executive, who is also the subject of a lawsuit.

“Defendants were aware that their conduct against U.S. investors was unlawful and risked coercive action by the U.S. government,” the SEC said in its filing. “Instead of stopping such illegal activities, Zhao and Binance doubled down.”

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