In a recent pretrial proceeding on July 15 against Binance, lawyers representing the U.S. Securities and Exchange Commission (SEC) found themselves struggling to justify their request for a near-total financial freeze order against Binance’s American subsidiary, Binance.US. This case is part of the SEC’s apparent efforts to scrutinize and dismantle the cryptocurrency industry in the United States.
The proceedings revealed several issues with the SEC’s approach during their request for an emergency injunction to freeze the assets of Binance.US and repatriate assets held abroad by related entities including Binance.com. The asset freeze request seems to suggest that the SEC believes the assets of Binance.US customers are at risk of being misappropriated by foreign entities or officials.
However, the evidence presented by the SEC appears to be largely circumstantial. When questioned by Judge Amy Berman Jackson, SEC lawyers failed to provide clear signs that U.S. customer assets had been, or were planned to be, exfiltrated by Binance International. Furthermore, the U.S. Department of Justice has so far declined to file criminal charges against Binance or CEO Changpeng Zhao, indicating a lack of convincing evidence to support the SEC’s allegations.
Instead, the SEC lawyers cited large transactions involving offshore entities, suggesting that such activity could pose a risk to the assets of Binance.US customers, despite not presenting any conclusive evidence. This approach seems to be based on the possibility of misuse rather than any concrete indication that such misuse has or will occur.
In addition to Bitcoin, the SEC has also targeted other prominent players in the crypto industry, including U.S-based Coinbase and the stablecoin Paxos. Their aggressive approach towards the industry has begun to raise eyebrows among both Republicans and Democrats on Capitol Hill, questioning whether the agency has overplayed its hand.
Ultimately, the early defeat of the SEC’s request for an emergency asset freeze during the pretrial proceedings may serve as a preliminary hint that the SEC’s case may not be as strong as initially thought. This case not only showcases the challenges that lie ahead for Binance but also highlights the potential flaws in the SEC’s Crypto crackdown, which appears to rely heavily on presumptions of guilt and criminality rather than concrete evidence. As the trial progresses, it will be interesting to see if the SEC’s approach changes or if skepticism towards their tactics continues to grow.
Source: Coindesk
