Judge Amy Berman Jackson approved an agreement between Binance.US, Binance, and the Securities and Exchange Commission (SEC) on June 17. This agreement dismisses a previous temporary restraining order (TRO) that would have frozen all Binance.US assets. The decision marks a pivotal moment in the ongoing legal battle between the SEC and the cryptocurrency exchange.
The SEC had filed an emergency motion for a temporary restraining order on Binance.US on June 6, alleging that Binance CEO Changpeng “CZ” Zhao had access to Binance.US customer funds through an entity he controlled called Merit Peak. The regulator claimed that $12 billion of Binance’s funds had been moved. Binance.US and Zhao denied any mishandling of funds and challenged the SEC to provide evidence of any wrongdoing.
Agreement Reached
On June 14, Judge Jackson expressed her preference for the parties to reach an agreement on their own rather than have her rule. After negotiations, Binance.US, Binance, and the SEC reached an agreement on June 16, which was subsequently approved by Judge Jackson. The agreement outlines various provisions that aim to address the concerns raised by the SEC.
Under the approved agreement, only Binance.US employees will have access to client funds until the litigation is resolved. This measure ensures that the assets remain secure while the legal process unfolds. Importantly, U.S.-based customers will retain the ability to withdraw funds throughout this period, safeguarding their interests.
The agreement includes a crucial provision that prohibits any access by Binance global officials to private keys of wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. This provision enhances the security of customer assets and prevents any potential unauthorized access.
Repatriation of Assets
A notable provision in the agreement pertains to the repatriation of certain assets to the United States. The agreement mandates that defendants, including Binance.US, transfer and confirm that BAM Trading, a related entity, maintains possession, custody, and control of all fiat currency and crypto assets deposited, held, traded, or accrued by customers. This provision seeks to ensure transparency and accountability in the management of customer assets.
To address concerns about potential funds mismanagement, the agreement requires Binance.US to take immediate action to provide a verified written accounting of accounts related to BAM entities valued greater than $1,000. This measure aims to establish clear financial reporting and auditing procedures to instill trust and accountability.
The approved agreement signifies a step forward in the legal proceedings between Binance.US and the SEC. Binance.US expressed satisfaction with the court’s decision, highlighting that the SEC failed to present any evidence of customer asset misuse. The outcome of this case will have broader implications for the regulation of the cryptocurrency industry in the United States and may set precedents for future legal disputes.