SEC’s ‘draconian’ temporary restraining order unnecessary, Binance says

Attorneys for Binance’s US entities, as well as CEO Changpeng Zhao, on Monday filed their rebuttal against the SEC’s request for a temporary restraining order that would affect assets. 

In a new filing ahead of a Tuesday hearing on the requested restraining order — which would effectively freeze the assets of Binance.US — Binance argued the SEC’s motion should be denied. 

All named in the SEC’s original complaint and ensuing restraining order request, Binance, Binance CEO Changpeng Zhao, BAM Trading and BAM Management responded on Monday. 

“The SEC’s request for a temporary restraining order should be denied for several reasons, but the most important is this: there is no risk to BAM’s customer assets. Indeed, there is no ‘emergency’ here at all, other than the one manufactured by the SEC for its own purposes, when the alleged securities law violations, according to the SEC, have been going on publicly and openly for years,” Binance wrote. 

Lawyers for Binance argued that the “SEC’s brief does not identify a single instance in which BAM customer assets were mishandled or misused.”

“While BHL and Mr. Zhao do not believe that the SEC has made a sufficient showing on any of its requested relief (which is based merely on unsubstantiated speculation), BHL and Mr. Zhao are willing to agree to the SEC’s requests for a document preservation order and to transfer ‘Customer Assets,’ and the keys related thereto, that are in the possession of BHL or Mr. Zhao to BAM personnel in the United States,” Binance said of the SEC’s original requests. 

Binance argued the entire temporary restraining order should be tossed out, because the “relief the SEC requests is unwarranted and improper.”

In a separate filing, BAM Management and BAM Trading claimed that “operations would quickly grind to a halt” if company funds were frozen, adding that in such a case, “BAM would be unable to even fund its defense to this action.”

Other consequences, according to the motion, would include Binance banking counterparties cutting off the transfer of funds “for any purpose including customer redemptions.” 

In addition, Binance argued that the SEC has to prove that the digital assets listed in its lawsuit are indeed securities. The SEC listed 10 tokens — SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI.

“As the statutory language makes clear, each charge requires the SEC to prove that the underlying digital assets are ‘securities’ or that BHL was otherwise engaged in facilitating ‘securities’ transactions. The SEC has not shown and cannot show substantial likelihood of success on these claims,” Binance said in its filing.

Last week, the SEC filed a lawsuit against Binance, Zhao, BAM Trading and BAM Management alleging violations of the Securities and Exchange Acts and claiming potential fraud. 

Neither Binance nor Binance.US immediately responded to requests for comment.

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