Proposed Agreement Addresses SEC’s Motion for Restraining Order. Federal Judge Approves Temporary Agreement: SEC, Binance, and Binance.US Collaborate to Restrict Access to Customer Funds to Local Employees Amid Ongoing Lawsuit.
Late on Friday, the involved parties announced an agreement aimed at restricting access to customer funds solely to Binance.US employees for the time being. Judge Amy Berman Jackson from the District Court for the District of Columbia promptly signed off on this arrangement early Saturday. Additionally, the judge instructed the parties to commence the process of proposing timelines for the larger lawsuit at hand.
As per the proposed agreement, Binance.US will implement measures to prevent officials from Binance Holdings, the global exchange, from having access to private keys for wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. Furthermore, the U.S.-based crypto trading platform will disclose comprehensive information about its business expenses, including estimated costs, in the upcoming weeks.
In response to an SEC motion seeking to freeze Binance.US’s assets during its pursuit of securities-related charges against the exchange, the proposed deal was put forth. The regulator expressed concerns over potential offshore fund transfers or destruction of records, emphasizing the need for a temporary restraining order (TRO). However, Binance.US’s legal team argued against a complete asset freeze, contending that such an action would essentially be a “death penalty.”
During a recent hearing, Judge Jackson advised the parties involved that reaching an agreement on a proposed stipulation would be more favorable than her crafting a restraining order, which would be limited to a two-week timeframe. The judge highlighted that the two-week period would be inadequate for preparation, considering the extensive volume of exhibits already filed, exceeding 4,000 pages.
The proposed agreement includes several additional provisions. Binance.US will establish new cryptocurrency wallets inaccessible to global employees, furnish the SEC with supplementary information, and commit to an accelerated discovery schedule. Notably, customers based in the United States will retain the ability to withdraw their funds throughout this period.
The proposed agreement aims to resolve certain concerns raised by the SEC while the larger lawsuit progresses through the judicial system. Last week, the SEC filed a lawsuit against Binance and Binance.US, accusing them of engaging in the offering and trading of unregistered securities, in addition to alleging significant commingling of funds and other questionable practices. However, it’s important to note that the proposed agreement does not specifically address the broader aspects of the lawsuit.
SEC’s Director of Enforcement, Gurbir Grewal, emphasized the significance of the prohibitions outlined in a press release. Highlighting the allegations of Changpeng Zhao and Binance having control over customer assets and the ability to commingle or divert them, Grewal emphasized that these restrictions are crucial for safeguarding investor assets. Moreover, the press release stated that measures have been taken to enable U.S. customers to withdraw their assets from the platform during the process of addressing the alleged misconduct and holding Zhao and the Binance entities accountable for the purported violations of securities laws.
Binance.US expressed its determination to defend itself against what it considers unwarranted charges in a tweet on Saturday. Despite acknowledging the adverse impact on their business and reputation, the company affirmed that its fighting spirit and resolve remain intact. They conveyed their commitment to overcome the challenges posed by the ongoing legal battle and stand up for their position.
A Binance spokesperson, in a statement released on Saturday, expressed satisfaction with the resolution of the disagreement regarding the SEC’s emergency relief request, despite maintaining that the request was unjustified. They reassured users that funds on all Binance-affiliated platforms have remained and will continue to be safe and secure. The statement aimed to instill confidence in the platform’s users by emphasizing their commitment to maintaining the security and integrity of user funds.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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