SEC Begins Counterattack In Lawsuit Against Binance

Key Points:

• The SEC takes a step forward in its case against Binance, filing a sealed motion for undisclosed documents.
• Its June lawsuit accuses Binance of mishandling funds, misleading stakeholders, and enabling unregulated trading for U.S. investors.
• Binance, Binance.US ensures U.S. customer assets stay put with an agreement amid the ongoing regulatory battle.

The U.S. Securities and Exchange Commission (SEC) filed a sealed motion with the District Court for the District of Columbia, requesting the court allow it to submit certain sealed documents.

Although the content of the specific document has not been made public, it may mean that the SEC is preparing to further reveal its allegations and evidence against Binance.

In June, the agency sued Binance and Changpeng Zhao for violating US securities rules. The commission sued Binance and CZ for violating US securities rules. In a 13-count indictment filed Monday, the SEC accused Binance of mishandling customer funds and lying to regulators and investors about its operations.

The regulator said Binance had been commingling “billions of dollars” of customer funds and secretly sending them to an independent company controlled by CZ.

The allegations include misleading investors about the adequacy of its systems to detect and control manipulative trading. The regulator also said that Binance did not do enough to limit U.S. investors’ access to Binance’s unregulated exchange.

The U.S. regulator alleged that Zhao and his exchange worked to subvert “their own controls” to allow high-net-worth U.S. investors and customers to continue trading on Binance’s unregulated international exchange.

Binance and Binance.US have entered into an agreement with the agency to ensure that U.S. customer assets remain in the United States until a sweeping lawsuit filed by the regulatory agency is resolved.

To make certain that U.S. customer assets do not go offshore, the agreement allows only Binance.US employees to have access to these assets.

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