The US Securities and Exchange Commission and Binance signed an unprecedented agreement to expedite the case and ensure that US clients’ assets remain in the country, according to a June 16 court filing.
Judge Amy Jackson approved the agreement but denied the SEC’s request to freeze Binance.US assets through a temporary restraining order (TRO). It had earlier asked both parties to negotiate an agreement between themselves to avoid a complete asset freeze.
The Securities and Exchange Commission (SEC) requested an asset freeze due to concerns about mixing of funds and fears that the exchange might divert assets out of the United States.
In a statement on June 17, SEC Director of Enforcement Gurbir Grewal said:
“Since Changpeng Zhao and Binance control the assets of the platform’s customers and have been able to mix customer assets or transfer customer assets as they wish, as we have claimed, these prohibitions are necessary to protect investor assets.”
Binance.US and CZ denied all allegations and said the SEC was “trying to kill the cryptocurrency industry” using harsh tactics.
Binance.US said in a statement After agreeing to the agreement:
“There has been no evidence presented by the SEC of misuse of clients’ assets. In fact, attorneys for the SEC admitted in court earlier this week, when asked by a judge, that they had no evidence to suggest any of this had occurred. kind”.
Proposed requirement and consent order
The agreement — dubbed the “Proposal and Approval Order” — essentially allows Binance.US to continue operations as normal despite the litigation.
In addition, it severed the alleged connection between Binance Holdings and Binance.US – which is officially known as BAM Trading in legal filings. It also includes provisions for the “repatriation” of all assets originating in the United States that may have been transferred out of the country.
The agreement includes an emergency asset relief provision requested by the SEC that will allow Binance.US clients to access and withdraw their funds from the platform during litigation.
“We have ensured that US customers will be able to withdraw their assets from the platform while we work to resolve the alleged underlying misconduct.”
Binance.US will be the sole custodian of the funds and has also been tasked with ensuring that Binance Holdings administrators cannot access its wallets, private keys and Amazon Web Services tools.
The agreement also states that Binance.US will move all customer funds to new wallets that only its employees can access. Moreover, Binance.US can spend only the funds you need for basic daily operations.
The crypto community is speculating that the SEC cases against Coinbase and Binance will take months if not years to conclude. This has led many industry participants to consider focusing their growth efforts outside the United States
However, the approval order aims to expedite the proceedings in Binance’s case with the SEC by having all defendants provide speedy discovery and sworn testimony to the SEC — significantly reducing the time it would take to reach a conclusion.
Binance.US is also authorized to provide “evidenced written accounting” for all accounts and transfers made between December 31, 2022 and the accounting date.
Encryption or security?
Judge Jackson, who is overseeing the Binance-SEC case, will issue preliminary rulings on whether certain cryptocurrencies are in fact securities under the law as part of the litigation.
Some of the tokens that the SEC has listed as securities in the cases against the two exchanges include Cardano, Solana, Polygon, and BNB, among others.
The initial rulings on these tokens are likely to have a far-reaching impact on the crypto industry in the United States