Binance.US, the cryptocurrency trading platform established by Binance CEO Changpeng Zhao to cater to U.S. clients, is facing a critical challenge that could significantly impact its operations.
In response to the Securities and Exchange Commission’s (SEC) request to freeze the exchange’s assets, Binance.US has warned that if a court ruling favors the SEC, its business would quickly come to a standstill.
The exchange vehemently urged a federal judge to dismiss the SEC’s motion in a court filing on Monday. Binance.US highlighted that a freeze on corporate assets would likely result in banking partners refusing to honor fund transfer requests for any purpose, including customer redemptions.
The company revealed that it has already experienced this setback, with one banking partner informing them that it would cease servicing their accounts from June 14.
Emphasizing the safety and segregation of customer assets, Binance.US assured that customer funds remain secure and accessible. To mitigate the escalating regulatory pressures, the platform temporarily suspended U.S. dollar deposits on Friday, citing the aim of safeguarding customers’ interests.
Unfortunately, the lawsuit filed by the SEC has taken its toll on Binance.US’s liquidity. Crypto data analysis firm Kaiko reported a substantial 80% drop in market depth over the past week, as market makers and traders left the platform en masse. Market depth, which stood at $34 million on June 4, has now plummeted to a mere $7 million.
In response to the mounting legal challenges, Binance.US has bolstered its legal defense team. Bloomberg reported that the exchange has enlisted the services of four additional lawyers, including George Canellos, a former SEC enforcement official.
As the legal battle ensues, the outcome of the asset freeze motion will determine the future of Binance.US. The cryptocurrency community will closely monitor developments, eager to ascertain the potential ramifications on the broader crypto landscape and the regulatory environment.
Also Read: Binance & Coinbase Under Fire: Is the SEC Killing Crypto?
