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Binance Co-Founder and CEO Changpeng Zhao speaks on stage during the opening night of Web Summit 2022.
Hugo Amaral | Soba photos | Light Rocket | Getty Images
The Securities and Exchange Commission filed an emergency motion in Washington, D.C., federal court on Tuesday night, asking the judge to freeze Binance’s US assets and return both fiat and cryptocurrency held by customers of the service.
The freezing order only applies to two US affiliates affiliated with Binance, and not to the non-US regulated international exchange. The order will apply to dozens of accounts held at Axos Bank, Silvergate Bank, Prime Trust and other institutions.
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The SEC alleged that two foreign entities also controlled by Zhao, Sigma Chain and Merit Peak, were conduits for billions of dollars in customer funds that were improperly mixed with Binance funds.
The Securities and Exchange Commission (SEC) filed a lawsuit against Binance and Zhao on Monday, alleging in thirteen separate counts that the exchange and Zhao operated to defraud investors, improperly mix funds, and act as an unregistered broker, dealer, and clearinghouse.
The regulator argued that the emergency restraining order was necessary “to prevent squandering the assets available to any judgment, given the defendants’ years of wrongful conduct, and disregarding the laws of the United States.”
The order also requires Binance founder Changpeng Zhao to “show why a preliminary injunction was not entered” against Zhao and his two holding companies. The restraining order would also prevent the three entities from destroying evidence.
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