Binance, the world’s largest cryptocurrency exchange, and its U.S. counterpart, Binance.US, have reached an agreement with the U.S. Securities and Exchange Commission (SEC) to keep U.S. customer assets within the country until the resolution of a comprehensive lawsuit filed by the regulatory agency.
This development, disclosed in late Friday court papers, marks a significant step in the ongoing legal battle between Binance and the SEC. The agreement, which still awaits approval from the federal judge overseeing the litigation, introduces strict measures to safeguard U.S. customer assets and restrict access to them.
Restricting Access and Ensuring Asset Protection
Under the Binance-SEC Agreement, Binance.US employees will be the only ones granted access to U.S. customer assets, effectively preventing any offshore transfer. Further, this provision aims to address concerns raised by the SEC regarding the commingling and diversion of customer assets by Binance and its CEO, Changpeng Zhao.
The restrictions are seen as crucial for protecting investor assets and ensuring their safekeeping during the course of the lawsuit. In addition, Gurbir Grewal, the director of the SEC’s enforcement division, emphasized the significance of these prohibitions :
“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets, and have been able to commingle customer assets or divert customer assets as they please, these prohibitions are essential to protecting investor assets.”
Binance-SEC Agreement to Create a Secure Environment and Compliance
Apart from access restrictions, the proposed agreement entails additional measures to strengthen asset security and regulatory compliance.
Binance US will establish new crypto wallets that are inaccessible to employees of the global exchange. This will ensure an added layer of protection for customer funds.
Furthermore, Binance.US will provide the SEC with supplementary information and adhere to an expedited discovery schedule, facilitating the legal proceedings.
Resolution of SEC’s Emergency Relief Request – Deadline for Customer Fund Withdrawals
The resolution of the SEC’s emergency relief request signifies a step toward mitigating the disagreements between Binance and the regulatory agency.
A spokesperson for Binance expressed satisfaction, stating,
“Although we maintain that the SEC’s request for emergency relief was entirely unwarranted, user funds have been and always will be safe and secure on all Binance-affiliated platforms.”
Further, the agreement awaits approval from the federal judge. The outcome of this legal battle will have significant implications for Binance, its U.S. operations, and the wider cryptocurrency industry. In the meantime, Binance’s U.S. affiliate had temporarily suspended dollar deposits, setting a deadline of June 13 for customers to withdraw their funds.