A federal judge has given her stamp of approval to a temporary agreement between the U.S. Securities and Exchange Commission (SEC) and the embattled crypto exchange, Binance.
The deal, signed off by Judge Amy Berman Jackson of the District Court for the District of Columbia, paves the way for Binance.US to take immediate action, ensuring that only local employees have access to customer funds. This development comes as the SEC pursues a lawsuit against Binance and its U.S. affiliate.
According to the consent order, the defendants, including CEO Changpeng Zhao, have consented to repatriating assets held on behalf of U.S. customers. This agreement ensures the protection and retention of these assets within the United States, preventing any potential offshore movement.
The agreement, announced late Friday, outlines steps that Binance.US will take to safeguard customer funds. Crucially, it prohibits officials from Binance Holdings, the global exchange, from accessing private keys, wallets, and Binance.US’s Amazon Web Services tools. Additionally, Binance.US commits to sharing detailed information about its business expenses in the following weeks, including estimated costs.
The proposed deal emerged as a response to the SEC’s motion to freeze all assets belonging to Binance.US while pursuing legal action on securities-related charges. Fearing offshore fund transfers and potential record destruction, the regulator sought a temporary restraining order (TRO). However, Binance.US’s legal team opposed the complete asset freeze, arguing that it would be akin to a “death penalty.”
While the TRO wasn’t granted, the suit continues. In a tweet by Binance, it emphasized that “there has never been any evidence presented by the SEC concerning mis-use of customer assets.”
“In fact, the SEC lawyers conceded in Court earlier this week, when asked by the Judge, that they had no evidence suggesting that any such thing had occurred,” the firm added.
Judge Jackson urged the parties to reach an agreement through a proposed stipulation rather than imposing her own restraining order, which would have come with a tight two-week time limit. Given the extensive exhibits already filed, totaling over 4,000 pages, the judge expressed concerns about the limited time for preparation during a hearing earlier this week.
Apart from the asset protection measures, the proposed agreement requires Binance.US to establish separate crypto wallets inaccessible to global employees, provide additional information to the SEC, and adhere to an expedited discovery schedule. Importantly, U.S.-based customers will still retain the ability to withdraw their funds during this period.
While this temporary agreement addresses some of the SEC’s concerns, the broader lawsuit against Binance and Binance.US for offering and trading unregistered securities remains ongoing. The SEC’s allegations extend beyond this agreement and encompass issues such as the commingling of funds and questionable practices.
“These prohibitions are essential to protecting investor assets, given the alleged control that Changpeng Zhao and Binance have exerted over customer assets. We will continue to pursue the underlying misconduct and hold Zhao and the Binance entities accountable for their alleged securities law violations, while ensuring that U.S. customers can withdraw their assets from the platform,” said SEC Director of Enforcement Gurbir Grewal.
Binance.US expressed its determination to defend itself against the allegations in a tweet on Saturday: “This fight has damaged our business and our reputation but not our fighting spirit or our resolve to defend ourselves against unwarranted charges.”
Information for this briefing was found via CoinDesk and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
