In a significant development, Binance.US has reached a groundbreaking agreement with the United States Securities and Exchange Commission (SEC), allowing the cryptocurrency company to continue its operations despite the ongoing legal battle with the commission.
Understanding the Background
Initially, on June 6, the SEC filed a court order seeking a temporary restraining order on Binance.US operations and the freezing of all assets on its trading platform.
However, the presiding Judge Amy Jackson declined to grant the order, opting instead to encourage both parties to negotiate an agreement that would safeguard consumer assets while avoiding a shutdown of the exchange.
According to a recent press release by the SEC, both Binance.US and the commission have finally arrived at a mutual understanding, receiving court approval for its implementation. Nonetheless, the original lawsuit remains pending in court.
The SEC's Allegations against Binance.US
On June 5, the SEC leveled 13 charges against Binance.US, its global partner Binance, and their founder, Changpeng Zhao, accusing them of operating "a web of deception."
These charges encompassed various allegations, including the operation of unregistered exchanges, broker-dealers, and clearing agencies, misrepresentation of trading controls and oversight on the Binance.US platform, and the unregistered offer and sale of securities.
Binance's Commitment to US Customer Funds
As part of the agreement with the SEC and its co-defendants, Binance.US has committed to "repatriate to the United States assets held for the benefits of customers of the Binance.US crypto platform," as stated by the SEC.
Furthermore, Binance.US is now required to keep all customer assets within the United States until a definitive court order is issued regarding the ongoing lawsuit. The U.S.-based exchange is strictly limited in terms of spending, only allowed to utilize funds for "ordinary course business expenses," subject to oversight by the SEC.
Moreover, Binance.US is strictly prohibited from granting co-defendants, Binance, or Changpeng Zhao any form of access to its customers' funds.
SEC's Perspective and Commitment to Investor Protection
Gurbir S. Grewal, the Director of the Division of Enforcement at the SEC, expressed the commission's commitment to safeguarding U.S. customer access to their investments while commenting on the agreement.
Highlighting the significance of these measures, Grewal 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, as we have alleged, these prohibitions are essential to protecting investor assets."
Furthermore, Grewal emphasized that the SEC ensured U.S. customers would be able to withdraw their assets from the platform while working to resolve the alleged misconduct and holding Zhao and the Binance entities accountable for their purported violations of securities laws.
Binance.US Remains Steadfast, Challenges SEC's Lack of Evidence
While acknowledging the recent agreement with the SEC, Binance.US maintains its unwavering resolve to defend itself, asserting that the commission has thus far failed to provide any evidence supporting its allegations.
Binance.US tweeted, "There has never been any evidence presented by the SEC concerning the misuse of customer assets. In fact, the SEC lawyers conceded in court earlier this week, when asked by the Judge, that they had no evidence suggesting that any such thing had occurred."
The U.S.-based exchange also criticized the SEC, accusing it of employing a "regulation by enforcement" strategy that contradicts the principles of the U.S. justice system.
The recent agreement between Binance.US and the SEC marks a significant milestone in the ongoing legal proceedings. While the lawsuit remains unresolved, both parties have reached a consensus, ensuring the continuation of Binance.US operations and the protection of customer assets. As the case progresses, the focus will be on addressing the alleged misconduct and upholding investor rights.