Embattled crypto exchange Binance US has said that the SEC’s motion to freeze its assets would cripple the exchange and hurt its customers. The crypto firm has begged a federal judge to disregard the move by the Securities and Exchange Commission.
In a report by Bloomberg earlier today, Binance US is contesting the SEC’s move to freeze its digital assets following the lawsuit served by the Commission to the crypto company.
According to the company’s attorneys, if the freeze is granted, operations will immediately halt arguing that it would not be able to pay workers, suppliers, and professionals, and it also would be difficult to maintain the platform. In addition, banking partners will stop honoring requests to transfer funds.
“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 court filing reads.
The SEC moved for Binane US asset freeze after it sued the company, Binance Holdings Ltd., and its founder and CEO Changpeng Zhao on June 5 for 13 violations. According to the lawsuit, the SEC alleged that the company puts its customers’ funds at risk by violating U.S. security laws.
The lawsuit further states that the company mislead investors and regulators and also mishandled customers’ funds. Following the lawsuit, the SEC filed a TRO (temporary restraining order) to freeze Binance US assets in a move to protect customers’ funds. However, Binance has released a statement to deny these accusations.
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Consequently, the company’s business has already been affected by the legal action as one of its banking partners already informed the firm that starting June 14, it will no longer hold its assets.
Previously, Binance US also announced in a statement on June 9, that it would halt USD fiat channels on the platform starting today June 13 meaning it will no longer be able to accept USD fiat deposits and withdrawals.
Binance continues to face regulatory scrutiny even outside the United States. On June 10, the Nigerian Securities and Exchange Commission declared Binance operations in the country as illegal as the firm isn’t properly registered with the regulators.
This development is part of a global move by regulatory bodies to scrutinize the crypto industry and ensure that it is operating under the law.