Federal regulators have declared that they do not have enough assurance about the safety of $2.2 billion of U.S. customer riches that are supposedly being supervised by Binance's U.S. branch.The SEC counsels brought an urgent movement, and have contended that the primary business of Binance and its initiator Changpeng Zhao are able to exercise real control over billions of dollars worth of client assets.The SEC has asked a federal judge to request a brief restraining order that would prevent these assets.
U.S. federal regulators argued in a filing Tuesday night, that the $2.2 billion of customer assets held by Binance is at "significant risk" of being stolen by founder Changpeng Zhao unless a freezing order is enforced. This came after the crypto regulator was charged with securities fraud by the Securities and Exchange Commission (SEC).Earlier on Monday, SEC lawyers filed an emergency motion asking a judge to repatriate and freeze U.S. customer assets to prevent any illicit transfers from Zhao or Binance entities.The SEC's lawsuit accusing Zhao and Binance of engaging in the unregistered offer and sale of securities and commingling investor funds with their own, states that two Binance U.S. subsidiaries, BAM Trading and BAM Management, were controlled by Zhao. They allegedly made "illicit gains" of at least $420.4 million in profits and venture fundraising.The filing also claims that communication between the SEC and Binance, who claim to have no headquarters, suggest that Binance.US could not make it clear who had control over customer assets. As a result of this, the SEC accused Zhao and Binance of having "free reign" over "customer assets worth billions of dollars."Zhao's lawyers contend that he is not subject to U.S. law, despite his control over U.S. companies and bank accounts that sent billions of dollars to holding companies in Switzerland and the British Virgin Islands. The SEC, however, claims that Zhao and Binance are within the court's jurisdiction.The court filing adds that since Binance.US has said it holds control over much of its technology and financial infrastructure, Zhao's ultimate control of customer assets puts them at risk unless the judge takes immediate action.The SEC is also requesting permission to serve Zhao by emailing his lawyers, citing his "pattern of geographical elusiveness" that makes it difficult to find his exact residence or whereabouts. Zhao is reportedly a resident of the United Arab Emirates (UAE).Binance did not immediately respond to a request for comment.
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