Attorney John Deaton, managing partner at Deaton Law Firm, said Judge Amy Berman Jackson denied the U.S. Securities and Exchange Commission’s (SEC) “unreasonable” request for an emergency temporary restraining order (TRO) against cryptocurrency exchange Binance.
"Binance did the right thing. Binance came in and said, 'Here are all the customer accounts in the United States of U.S. investors, here's the private keys, U.S. government, SEC. They're protected 100%. You're in control. We can't touch the money, but don't freeze us.' The SEC's initial response: No. Because they want destruction [...] and the judge was taken aback by the SEC being so unreasonable," Deaton said on "The Wolf of All Streets" podcast.
On June 6, the SEC “filed an emergency action application seeking a temporary restraining order freezing assets, directing defendants to repatriate assets held for the benefit of customers of the Binance.US crypto trading platform and seeking other emergency relief against Binance Holdings Limited, BAM Trading Services Inc., BAM Management US Holdings, Inc. and their founder, Changpeng Zhao, to ensure that Binance.US customers’ assets are protected and remain in the United States through the resolution of the SEC’s pending litigation of this matter,” according to a press release.
In a court filing, Binance said there were three main reasons the court should reject the SEC’s emergency TRO request. The first reason, Binance said, is that the SEC’s requested relief is “unwarranted and improper,” noting that the SEC “must carry the burden of establishing a right to the relief it requests,” which the filing said the SEC has not done. Second, the SEC’s request to freeze user assets is “untethered” to the SEC’s complaints against the company, which are alleged registration violations.
“The SEC’s brief does not identify a single instance in which BAM customer assets were mishandled or misused,” the filing states. Finally, Binance said that the “SEC has failed to show the requisite likelihood of success as to the registration claims.” The filing states that the regulator “does not have authority to require registration when it has not answered the threshold question of what cryptocurrency assets, if any, constitute securities under federal securities laws.”
Berman Jackson denied the SEC's request for the emergency TRO to freeze Binance.US's assets, instead directing the SEC and Binance to negotiate and come to an agreement, The Crypto Basic reported.
Venture capitalist Dan Gambardello said in a tweet that Berman Jackson “expressed doubts about the SEC's approach to crypto regulation, describing it as 'inefficient and cumbersome.'”
One attorney said on Twitter, “The judge, apparently, caught on that there was no actual emergency. I am told the judge pressed the SEC lawyers on whether they had any actual evidence of @BinanceUS customer assets being moved overseas. They had none. Round 1 to @Binance and @cz_binance”