In a June 21 filing in the U.S. District Court for the District of Columbia, legal counsel for Binance, Binance.US and the firm’s CEO Changpeng Zhao asked that the court compel the U.S. Securities and Exchange Commission (SEC) to comply with the applicable rules of conduct and refrain from making misleading statements outside the courtroom.
The lawyers were referring to a June 17 press release issued by the SEC, describing the agreed upon consent order between the two parties as “emergency relief” that was secured in order to protect Binance.US’ customer assets.
In the press release, the Director of the SEC’s Division of Enforcement Gurbir S. Grewal said that Zhao and Binance “have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please.”
Contrary to Grewal’s statements, the SEC confirmed to the court in a hearing four days prior that it had no evidence that Binance.US customer assets were commingled or misused in any way.
Binance’s lawyers highlighted a section from the June 13 court transcript, where the Judge repeatedly asked the SEC to show evidence that money from the U.S. company has been moving out.
Lmao @ Binance v. SEC #FireGensler
Court: "I want to know, are BAM assets going offshore? Is it happening or is it not? It's stunning to me that I've now asked this question to each of the SEC attorneys 5 times."
SEC: "So currently the assets are not going offshore… We're not… pic.twitter.com/QkEY5HM2ji
— Tree of Alpha (@Tree_of_Alpha) June 21, 2023
“So currently the assets are not going offshore. . . . [W]e’re not seeing any flows of money outside of the United States,” stated the SEC lawyers in the court hearing.
Despite this acknowledgement, the SEC immediately put out the press release which suggested that Binance.US’ customer assets were in danger, said Binance’s lawyers. The regulator’s statements served only to reinforce confusion among the exchange’s customers and banking partners, and risks tainting the jury pool, they added.
On-chain data suggests that investor sentiment around Binance has also turned around considerably since the SEC announced the enforcement action against the crypto exchange. Although Binance recorded $1.4 billion in outflows the day after news of the lawsuit, blockchain data provider Nansen found that the “tide has changed.”
Binance had a positive inflow of $1.8 billion across chains besides Bitcoin over the last week, said Nansen.