Binance and Binance.US have reached an agreement with the SEC to keep the assets of their US customers within the United States during an ongoing lawsuit.
The SEC has accused Binance of inflating trading volumes, misusing customer funds, and misleading investors.
The agreement ensures that only Binance.US employees can access the assets of US customers, providing protection for investor funds while legal proceedings continue.
Binance and Binance.US agree with SEC to keep customer assets in the US during ongoing lawsuit
Binance and Binance.US ensure US customer assets remain in the United States amidst regulatory lawsuit
Binance, the world's largest cryptocurrency exchange, and its subsidiary Binance.US, have entered into an agreement with the US Securities and Exchange Commission (SEC) to ensure that assets belonging to their US customers remain within the country while a lawsuit filed by the regulatory agency is ongoing.
The agreement, disclosed in court documents filed late on Friday, is subject to approval by the federal judge overseeing the case. It stipulates that only Binance.US employees will have access to these assets, preventing them from being moved offshore.
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On June 5, the SEC filed a lawsuit against Binance, its CEO and founder Changpeng Zhao, as well as the operator of Binance.US. The suit alleges that Binance artificially inflated trading volumes, diverted customer funds, failed to restrict US customers from its platform, and misled investors about its market surveillance controls.
This lawsuit, along with another filed by the SEC against major US exchange Coinbase the following day, represents an intensified crackdown by US regulators on the industry.
Although the agreement does not resolve the SEC lawsuit, it outlines steps that Binance.US will take to ensure that no officials from Binance Holdings have access to private keys for its various wallets, hardware wallets, or root access to Binance.US's Amazon Web Services tools, according to court filings.
In a statement released on Saturday, the SEC emphasized that the emergency relief order obtained for Binance.US customers will safeguard their assets and allow them to continue withdrawing those assets.
Gurbir Grewal, director of the SEC's enforcement division, stated in the statement, "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."
A spokesperson for Binance expressed satisfaction with the resolution of the disagreement over the SEC's emergency relief request, stating, "Although we maintain that the SEC's request for emergency relief was entirely unwarranted, we are pleased that the disagreement over this request was resolved on mutually acceptable terms. User funds have been and always will be safe and secure on all Binance-affiliated platforms."
Among other provisions in the proposed agreement, Binance.US will create new crypto wallets that will be inaccessible to employees of the global exchange, provide additional information to the SEC, and agree to an expedited discovery schedule, as outlined in the court filings.
Last week, Binance's US affiliate halted dollar deposits and set a deadline of June 13 for customers to withdraw their dollar funds, following the SEC's request to freeze its assets.
