SEC Sought Freeze Order Despite ‘No Evidence’ That Binance Was Moving U.S. Customer Funds

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One judge’s skepticism echoes a growing sense that government officials think the SEC is overreaching, davidzmorris writes. Opinion for The Node newsletter.

As Judge Amy Berman pressed the SEC’s lawyers, it became increasingly clear that the SEC had at best circumstantial grounds for its requested freeze. Jackson expressed sharp frustration when the SEC could not provide any clear sign that U.S. customer assets had been, or were planned to be, exfiltrated by Binance International.

“It's happening or it's not?” Judge Barrett asked at one point. “It's kind of stunning to me that I've now asked this question to each of you [SEC lawyers] five times” without getting a clear answer. “So currently the assets are not going offshore,” replied SEC counsel Jennifer Farer. “…the current accounts, we're not seeing any flows of money [to] outside of the United States.”

Judge Jackson also noted seeming discrepancies in earlier documents supporting the injunction request.“There are a lot of details about amounts transferred and where they went…” Barrett asked the SEC’s lawyers. “You say these funds consisted in significant part of Binance platforms, plural, customer assets, including those of

… Can you clarify or walk me through the transfers you allege were made specifically from the U.S. entities, as opposed to the international Binance platform, to offshore accounts held by Zhao, and how you know that those were customer assets?”Instead, SEC counsel returned repeatedly to large transactions involving offshore entities. In one instance when Jackson pressed for detail on the claims of U.S.

 

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