SEC Requests Binance Asset Freeze, Exchange Hires Former Agency Director as Lawyer (Report)

Last week, the SEC sued Binance for violations of U.S. securities laws and “years of violative conduct” that allegedly put customers’ funds at risk.

Now, the regulatory agency wants to freeze those said funds.

Complete Freeze of Assets Requested

Since customers’ funds are allegedly at risk, it was only convenient that a complete asset freeze be requested from the U.S. government. The request would target the assets of both Binance U.S. and the global exchange and would also seek to repatriate funds held abroad.

One unnamed former banking partner – who will cease handling deposits and withdrawals for the exchange starting on the 14th of June – even froze Binance’s assets of its their volition ever since the court case started. However, those assets will most likely be recovered by Binance once the bank closes its account.

The exchange has, naturally, argued against the “draconian relief sought by the SEC,” saying customer funds were perfectly safe and a freeze would do nothing but prevent Binance customers from using their funds as they did so far. Of course, a freeze would also conveniently hamper the company’s operations – and probably make its legal defense a lot harder.

“Operations would quickly grind to a halt without the ability to pay employees, vendors, suppliers, and professionals or to maintain the trading platform. With a freeze of all corporate assets, banking partners would most likely cease to honor requests to transfer funds for any purpose, including customer redemptions.”

Binance Will Be Defended by Former SEC Insider

In order to fight what many see as an overreach by U.S. regulators, Binance has signed on several new lawyers from Milbank LPP.

One of the four freshly contracted lawyers is none other than George Canellos, a former co-director of the Securities and Exchange Commission’s enforcement division. His best-known managed cases include the SEC’s investigations into the insider trading charges leveled against Raj Rajaratnam. Prior to his stint at the agency, Canellos had served with the Major Crimes Unit of the Southern District of New York.

John Reed Stark, the former head of the SEC’s Office of Internet Enforcement, commented on the news. According to him, the decision to hire such a specialized lawyer indicates that Binance expects to fight serious criminal charges in a long, drawn-out court battle.

“Canellos possesses a rare and remarkably special combination of skillsets — having served as both an SEC prosecutor and a DOJ prosecutor. Think Liam Neeson meets Perry Mason. Binance is clearly preparing for criminal prosecution and continuing to hire the best defense attorneys in the world.”

Two other lawyers formerly served with the SDNY’s criminal division, focusing on cybercrime, terrorism, the narcotics trade, and white-collar financial crime, further substantiating Stark’s assessment of the situation.