Binance.US Gets Good News as Judge Denies SEC’s Request to Freeze Funds
Binance.US, a cryptocurrency exchange, received positive news when a federal judge rejected the SEC’s demand to freeze the funds and assets held on the Binance.US trading platform. This decision came shortly after Binance had already asked the court to reject the SEC’s proposal.
US District Judge Amy Berman Jackson announced on Tuesday, June 13, that Binance.US and the Securities and Exchange Commission (SEC) have reached an agreement to prevent a complete freeze of assets. Judge Jackson stated that both parties are close to finding a solution to safeguard the billions of dollars in customers’ funds, allowing the exchange to continue operating while the lawsuit progresses. This means that Binance.US may not have to shut down during this time.
During a recent hearing, Judge Jackson mentioned that the intricate details of the matter would be best resolved by Binance.US and the SEC themselves, rather than relying on her decision. The judge further stated that if both parties can come to a mutual agreement, she would not need to rule on the SEC’s request for a temporary restraining order. This indicates that the judge encourages the two sides to find a resolution amongst themselves, eliminating the need for her intervention in this particular aspect of the case.
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Binance.US Refuses to Relinquish Control of Funds
After initiating a lawsuit against Binance.US for alleged violations of federal securities laws, the SEC quickly requested an order to freeze the funds held at Binance.US. The SEC argued that this measure would prevent the funds from being spent or dispersed while the case is ongoing.
However, Binance.US firmly objected to the SEC’s request, expressing that freezing the funds would severely impact its operations and negatively affect its customers. Binance.US lawyers conveyed to the judge that they were unwilling to accept such a severe consequence so early in the case, referring to it as a “death penalty” for their business.
Binance also stated that it requires sufficient funds to cover regular business expenses, including salaries, rent, vendor payments, and software licensing. The attorney representing Binance.US expressed concern over the potential misinterpretation of an asset freeze by banks, which could create difficulties for the exchange. In simpler terms, Binance is worried that if its assets are frozen, banks may not understand the situation correctly and this could cause additional problems.
Binance.US and SEC Reach Agreement in Compromise
Binance put forward a proposal suggesting a plan to transfer US customers’ cryptocurrency to new wallets, which would be managed exclusively by officers located in the US at Binance.US. The exchange sought permission to keep paying its employees and covering necessary expenses as part of the plan. However, Binance assured that no assets would be transferred or payments made to benefit any Binance entity without prior approval from a judge.
In response, the SEC suggested that Binance should repatriate customer assets back to the US. By doing so, the assets would be in the control of entities that are independent of Zhao (the founder of Binance) and capable of managing customer withdrawals effectively.
During the hearing, an SEC lawyer stated that the regulator is willing to consider a specific exception that would permit Binance.US to continue operating even during the asset freeze. The SEC also asked Binance.US to provide information regarding its expenses and fees, aiming to gain a clearer understanding of the financial obligations involved in maintaining the platform. The judge requested Binance.US to submit its business expenses by Wednesday.
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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