In a recent court filing, Binance.US, the cryptocurrency trading platform established by Binance CEO Changpeng Zhao to cater to U.S. clients, expressed concerns that its operations would come to a screeching halt if a court ruled in favor of the Securities and Exchange Commission’s (SEC) request to freeze the firm’s assets. The company urgently appealed to the federal judge to dismiss the SEC’s motion to freeze the assets of the entities running Binance.US. The SEC sued Binance and Zhao on June 5, alleging unregistered offers and sales of securities.
According to the court filing, Binance.US emphasized the dire consequences that a freeze on all corporate assets would entail. The company anticipated that banking partners would likely refuse to process fund transfers for any purpose, including customer redemptions. The filing revealed that one banking partner had notified Binance.US of its intent to terminate services starting June 14. Despite this unsettling development, Binance.US reassured its customers that their assets remained secure, adequately segregated, and readily accessible.
Responding to escalating regulatory pressures, Binance.US recently suspended U.S. dollar deposits to safeguard its customers. The aftermath of the lawsuit has been detrimental to the platform’s liquidity, as market makers and traders have swiftly departed from the exchange. Kaiko, a prominent crypto data analysis firm, disclosed that market depth on Binance.US had plummeted by nearly 80% within a week of the lawsuit. The market depth, which stood at US$34 million on June 4, has shrunk to a mere US$7 million.
To defend itself against the lawsuit, Binance.US has taken proactive measures by enlisting the services of four additional lawyers, including George Canellos, a former SEC enforcement official. Bloomberg reported this development, highlighting the company’s determination to address its current legal challenges.
Binance.US is in a precarious position due to the SEC’s lawsuit and the potential asset freeze. The company is earnestly fighting against the freeze, as it understands its severe ramifications on its ability to operate. The impact has already been felt with the loss of a banking partner. Despite these setbacks, Binance.US emphasizes the safety and availability of customer assets. However, the liquidity on the platform has taken a significant hit, leaving market participants concerned. Binance.US is taking steps to confront the lawsuit head-on by expanding its legal team. The outcome of this legal battle will undoubtedly have far-reaching consequences for both Binance.US and the wider cryptocurrency industry.
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