Binance and the U.S. Securities and Exchange Commission (SEC) have reached a compromise to prevent the possible freezing of the cryptocurrency exchange’s U.S. assets. As part of an urgent relief granted by the regulatory body, Binance has agreed to transfer back to the U.S. any funds held for its American subsidiary’s customers.
SEC Agreement Assists Binance US Customers to Withdraw Funds, Avoiding Asset Freeze
The U.S. securities regulatory authority made an announcement on Saturday about an urgent relief that it obtained. In this agreement, all parties operating Binance US, including its founder Changpeng Zhao (CZ), consented to the return of U.S. assets held for American clients.
This decree issued by the United States District Court for the District of Columbia ensures that Binance US users can extract their assets from the trading platform, a fact highlighted by the SEC. The regulatory body further assured in a press release that assets held in Binance US would be safeguarded and remain in the United States.
This disclosure follows previous reports stating that Binance and the SEC had settled on this arrangement. As per Coindesk and Reuters, only Binance US employees will have access to U.S. customer funds under this agreement, excluding officials from Binance Holdings, which operates the global trading platform.
Earlier, the SEC had requested a temporary restraining order for Binance’s U.S. subsidiary’s assets, citing safety concerns, and had filed a lawsuit against the crypto exchange for allegedly violating U.S. securities laws. It accused Binance and its founder and CEO of mismanagement of customer funds and misleading investors.
Legal counsel for Binance urged the court to deny the SEC’s request, contending that freezing assets would equate to a “death sentence” for the U.S.-based entity. During a hearing in Washington on Tuesday, U.S. District Judge Amy Berman Jackson offered both parties a chance to negotiate an agreement that ensures user funds are secure without crippling the crypto business.
Binance Obliged to Grant SEC Supervision Over Business Expenditures
The recent court order also bars defendants BAM Trading Services Inc. and BAM Management US Holdings, Inc. from utilizing corporate assets outside of regular business operations, as noted by the SEC. These entities have also been instructed to provide the SEC with oversight over such expenditures.
Gurbir S. Grewal, Director of the Division of Enforcement, stated: “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.” He further added:
Moreover, we ensured that U.S. customers can withdraw their assets from the platform while we endeavor to address the alleged underlying misconduct and hold Zhao and the Binance entities responsible for their alleged securities law violations.
Binance is now mandated to keep U.S. customer assets within the United States throughout the duration of the SEC litigation and enable customer withdrawals. The court order forbids BAM from transferring assets or funds or providing control over such, to Binance Holdings, CEO Changpeng Zhao, or their affiliates.
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