Binance.US and SEC Agree to Deal that Suspends Complete Asset Freeze and Allows Operations to Continue
The deal will require Binance.US to submit its operating expenses to the court and the SEC to protect the business as the case progresses.
Binance US and the US Securities and Exchange Commission (SEC) have agreed to work on a deal that would not require a total asset freeze on the exchange. A Bloomberg report says the deal will allow the SEC lawsuit to continue without hurting Binance or user funds.
According to US District Judge Amy Berman Jackson, Binance.US and the SEC agree that customers must maintain access to their funds regardless of the problem between both entities. The SEC had requested that the court freeze Binance.US assets after it accused the exchange of misappropriating user funds and violating multiple regulations.
Judge Jackson asked both parties to work on the deal and handed the “nitty-gritty” to a magistrate judge.
Complete Binance.US Shutdown as Requested by the SEC
Judge Jackson agreed with the Binance.US attorney that a complete shutdown would be disastrous. At the hearing, she said:
“Shutting it down completely would create significant consequences not only for the company but for the digital assets markets in general.”
The Binance.US attorney argued that operating expenses were required at the very least. Regardless of the SEC’s lawsuit, it is still necessary for the exchange to pay salaries, rent, vendors, and other business expenses. In addition, the attorney said freezing assets “…will be misconstrued by banks”.
On the other hand, the SEC’s attorney argued for the asset freeze because the commission fears Binance would transfer user funds offshore. The lawyer also wants Binance to transfer funds to the US and submit them to third-party entities not tied to Binance or CEO Changpeng Zhao.
Furthermore, the SEC was open to allowing Binance.US enough assets to handle its business expenses and operations. It asked the exchange to submit a breakdown of all fees and costs required for operations to continue. Judge Jackson agreed and gave Binance US a Wednesday deadline for the submission.
The Lawsuit
Last week, the SEC accused Binance of mishandling user funds through a separate entity that Zhao controls. Among other accusations, the SEC also said Binance did not adequately keep US customers restricted to the Binance US platform. According to the SEC, it deliberately allows “high-value US customers” to trade on the parent exchange.
Binance US functions as a separate entity that adheres strictly to US laws on trading and general operations. The SEC’s Division of Enforcement director Gurbir S. Grewal said in a statement that Binance and Zhao knew of these rules and deliberately violated them for profits. Furthermore, the regulator said Binance and Zhao consciously risked their customers and investors.
Binance has since responded to the lawsuit, claiming that the SEC was deliberately being difficult. In the response, Binance said it has a history of cooperating with the regulator and answering all pertinent questions. However, Binance expressed disappointment that the SEC sued the exchange instead of continuing with “good-faith discussions” both parties were already having.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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