The SEC is trying to freeze Binance’s assets

The Securities and Exchange Commission is trying to freeze the assets of Binance, the world’s largest cryptocurrency exchange. In an emergency motion for a temporary restraining order filed Tuesday (PDF), the SEC says it has made this decision to “ensure the safety of customer assets.”

The filing also claims that Binance has engaged in “violative conduct” for years in “disregard of the laws of the United States, evasion of regulatory oversight, and open questions about various financial transfers and the custody and control of Customer Assets.”

As part of the order, Binance and CEO Changpeng “CZ” Zhao are required to give up “possession, custody, or control over Customer Assets” within five days, with Zhao nor the company having the ability to transfer or withdraw assets from its customer wallets. It also asks that Binance transfer customers’ assets to “new wallets with new private keys, including new administrative keys,” and for the exchange to provide the SEC with a record of all new wallets with customer assets.

In the proposed order, ordinary customers may continue to redeem their assets “with the exception of and specifically excluding Customer Crypto Assets of any of the Binance Entities and otherwise subject to the prohibition that it not transfer Customer Assets for the benefit of any of the Binance Entities.”

Zhao responded to the motion by retweeting a post saying, “We are about to find out how solvent #Binance is.”

“The SEC is being extremely aggressive in trying to freeze the assets of Binance pending the outcome of this dispute,” says Moish Peltz of the law firm Falcon, Rappaport & Berkman. “If the court granted this motion, it would likely have a material impact on the operation of the parties subject to the court order.”