Binance ordered to repatriate US assets as SEC wins emergency relief action

The Securities and Exchange Commission has secured emergency relief in which all the defendants in its litigation against Binance Holdings Limited, BAM Management US Holdings Inc., BAM Trading Services Inc., and Changpeng Zhao agreed to repatriate to the United States assets held for the benefit of customers of the Binance.US crypto trading platform.

The order from the United States District Court for the District of Columbia comes as a huge blow for Binance as the crypto exchange operator vowed to fight it after expressing disappointment with the SEC seeking purported emergency relief.

US assets held by Binance must be repatriated

It was on June 6 that 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 other Binance entities.

The order came through two days ago and also prohibits defendants BAM Trading Services Inc. and BAM Management US Holdings, Inc. (together, “BAM”) from spending corporate assets other than in the ordinary course of business.

The order helps ensure that Binance.US customers are permitted to withdraw their assets from the platform and that those assets that remain on the platform are protected and remain in the United States through the resolution of the SEC’s pending litigation against Binance Holdings Ltd., BAM, and their founder, Zhao.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said: “Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please, as we have alleged, these prohibitions are essential to protecting investor assets. Further, we ensured that U.S. customers will be able to withdraw their assets from the platform while we work to resolve the alleged underlying misconduct and hold Zhao and the Binance entities accountable for their alleged securities law violations.”

The court order:

• requires all of the defendants to repatriate to the United States assets held for the benefit of BAM’s U.S. customers;
• requires BAM to maintain U.S. customer assets in the United States for the duration of the litigation and to facilitate customer withdrawals;
• prohibits BAM from transferring any assets or funds, or from providing control over such assets or funds, to co-defendants Binance Holdings Limited, Changpeng Zhao, or their affiliates;
• restricts BAM from spending assets or funds except for ordinary course business expenses and requires BAM to provide the SEC with oversight over such expenses;
• prohibits all of the defendants from destroying records;
• requires all of the defendants to submit expedited sworn accountings of certain assets to the SEC; and
• requires all of the defendants to submit to expedited discovery by the SEC on the custody and security of customer assets.

Binance awarded ISO 27001 and ISO 27701 certifications

On the day that the SEC announced its emergency relief action against Binance, the crypto exchange announced it had been awarded the ISO 27001 and ISO 27701 certifications for information security governance and privacy information management in three jurisdictions across Europe and the Middle East: France, Bahrain, and the United Arab Emirates (UAE).

The firm secured the ISO 27001 and ISO 27701 certificates as an organization meeting the internationally recognized standards in information security governance and privacy information management, respectively.

The announcement came on the same day as the SEC filed a complaint against Binance and is seeking emergency relief. Binance vowed to fight that because, the firm stated, all user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure.