Binance May Dodge Asset Freeze It Said Would Crush Its Business
Binance.US, the American crypto exchange sued last week by the Securities and Exchange Commission, likely won’t face a broad asset freeze that it said could cripple its business.
The SEC last week asked a federal court to impose the freeze, saying regulators hadn’t received “sufficient assurances” that $2.2 billion in customer assets held by Binance.US are safe. The agency alleges that Binance and Binance.US operated unlicensed securities exchanges in the U.S. and transferred customer funds to a third party.
At a Tuesday court hearing in Washington, U.S. District Judge Amy Berman Jackson heard the SEC’s request for a freeze but appeared dubious about ordering one. The company’s lawyers said it would prevent Binance.US from paying employees, rent and other expenses.
Judge Jackson repeatedly asked the SEC’s attorneys whether they had found misconduct that would support ordering a total freeze on funds, such as evidence of any of the $2.2 billion leaving the U.S. Jennifer Farer, an SEC trial attorney, eventually responded that “currently the assets are not going offshore.”
Farer also said that Binance.US’s lawyers had told regulators that the exchange may shut down and that “the risk is great” that funds could be transferred beyond the reach of the SEC.
Binance.US’s attorneys said all customer funds are safe and that the exchange would continue processing withdrawals, but that it needs access to its own funds to continue operating. “We are not willing to accept the death penalty eight days into the case,” attorney Matthew Martens said.
Judge Jackson suggested there could be a reasonable compromise on a more limited asset freeze and ordered the parties to report to her by Thursday on whether they have made progress on such an agreement.
