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In a significant display of legal authority, the U.S. Securities and Exchange Commission (SEC) took decisive action on Tuesday. Through an unexpected maneuver, it filed an appeal to a federal court in Washington, D.C., urging an immediate halt to Binance's operations in the United States. The SEC requested the court to suspend the company's U.S. assets and facilitate the return of both fiat and cryptocurrency assets to Binance's customer base.
It's important to note that this potential freeze applies solely to Binance's U.S. subsidiaries and does not encompass the broader international exchange, which operates under different regulatory jurisdictions. If the court approves this order, it would impact numerous account holders across various banking institutions, including Axos Bank, the now non-operational Silvergate Bank, Prime Trust, and others.
Furthermore, the SEC has directed attention towards two overseas firms under the control of Changpeng Zhao - Sigma Chain and Merit Peak. The SEC alleges that these firms served as conduits for billions of dollars in customer funds that were improperly commingled with Binance's own reserves.
On Monday, the SEC levied a legal challenge against Binance and its founder, Changpeng Zhao, presenting a comprehensive set of thirteen allegations. These allegations include claims that Binance and Zhao misled investors, mishandled funds, and operated without the necessary registration as a broker, dealer, and clearinghouse.
The SEC emphasized that the emergency stop order was essential to prevent any potential dissipation of assets, thereby preserving them for future judgments. The need for this action stemmed from the defendants' prolonged misconduct and disregard for U.S. laws.
Additionally, the order requires Changpeng Zhao to personally provide an explanation as to why a preliminary injunction should not be issued against him and his two holding companies. This step would further prohibit all parties involved from destroying any potential evidence.
