Crypto exchange Binance has expressed its disappointment with the recent allegations made by the US Securities and Exchange Commission (SEC) regarding fund mishandling, unregistered exchange operations, and the sale of unregistered securities.
In response to the SEC’s lawsuit, Binance, CEO Changpeng Zhao, Binance.US, and BAM Trading issued statements denying the allegations and criticizing the SEC’s approach to regulation.
Binance’s Disheartenment and Unilateral Action: Binance stated that it had engaged in extensive discussions with the SEC in an effort to reach a negotiated settlement and resolve the investigations.
However, the SEC chose to act unilaterally and initiate litigation instead of pursuing a negotiated solution. Binance expressed its disheartenment with this choice in its official statement.
Unjustified Filing and Commission’s Precedent: Binance.US also criticized the SEC’s filing, describing it as unjustified based on the facts, the law, and the Commission’s own precedent.
The exchange drew parallels with Coinbase’s ongoing legal battle with the SEC, highlighting its belief that the SEC is employing enforcement and litigation as blunt regulatory tools, rather than taking a thoughtful and nuanced approach appropriate for the dynamic and complex nature of the technology involved.
Binance expressed concern over the SEC unilaterally labeling certain tokens and services as securities, even when other US authorities have asserted jurisdiction and suggested that this approach exacerbates regulatory challenges.
Binance’s Response to Allegations: Binance directly refuted the SEC’s claim that Binance.US commingled user funds, asserting that user assets are safe and secure.
The SEC’s lawsuit alleged that funds from Binance Platforms, controlled by Zhao and Binance, were commingled in an account held by a Zhao-controlled entity, which was subsequently transferred to a third party in connection with crypto asset transactions. Binance denied these allegations.
Unlawful Offering of Securities Market Functions: The SEC’s lawsuit also accused Binance and BAM Trading, under Zhao’s leadership and control, of unlawfully offering three essential securities market functions—exchange, broker-dealer, and clearing agency—on the Binance Platforms without registering with the SEC.
The lawsuit claimed that despite being aware of the requirement for registration, the defendants deliberately chose not to register to evade critical regulatory oversight intended to safeguard investors and markets.
