Changpeng Zhao and the entities he leads sued the U.S. Securities and Exchange Commission (SEC), accusing the regulator of deliberate deception of the public and unprofessional conduct.
Lawyers representing Binance, Binance.US, and Changpeng Zhao sued the SEC in the U.S. District Court for the District of Columbia. The regulator is accused of deliberately “misleading” the public regarding the crypto exchange representatives’ improper use of customer funds.
The SEC’s allegations were made public in press releases announcing that Binance and Changpeng Zhao personally could “commingle customer assets or divert customer assets.” This was the reasoning behind the SEC’s court request to block all assets of Binance.US. That said, excerpts from the court transcript show that regulators have denied such actions by the crypto exchange in the past or present and have made generally contradictory statements.
The statement indicates that the regulator has no evidence of misuse of client funds by BAM Trading, the parent company of Binance.US. Thus, the SEC’s public statements create unwarranted confusion in the market, mislead the jury, and are inconsistent with the rules of professional conduct. The crypto exchange’s side seeks the regulator’s compliance with the “applicable rules of conduct.”
If the suit is approved, the SEC representatives will be restricted from making public statements regarding Binance during the trial, which could significantly affect the court’s decision.
At the beginning of June, the SEC sued a number of Binance’s structures and its head, accusing them of defrauding investors and violating U.S. law. After that, the regulator filed a court petition for a total freeze of Binance.US assets, explaining the need for such actions by the reasons which are now denied in court by representatives of Binance. Tellingly, the court forced the regulator and Binance to find a compromise solution, but now this case has taken another turn.
