Binance and SEC Temporary Agreement
A federal judge has signed off on a temporary agreement between the U.S. Securities and Exchange Commission (SEC) and Binance, allowing Binance.US to implement measures to ensure that only local employees can access customer funds. The agreement aims to address the SEC’s concerns while the lawsuit progresses.
Key Provisions of the Agreement
Under the proposed agreement, Binance.US will take steps to prevent officials from Binance Holdings, the global exchange, from accessing private keys, hardware wallets, or Binance.US’s Amazon Web Services tools. Additionally, Binance.US will provide detailed information about its business expenses in the coming weeks.
Freezing Assets vs. Temporary Agreement
The proposed agreement comes in response to the SEC’s motion to freeze all of Binance.US’s assets during the securities-related charges investigation. The SEC expressed concerns about funds being moved offshore or records being destroyed. Binance.US’s legal team argued that freezing all assets would be disproportionate and likened it to a “death penalty.”
Judge’s Ruling and Time Constraints
Judge Amy Berman Jackson advised the parties to reach a proposed stipulation instead of her issuing a restraining order, which would have had a two-week time limit. Given the extensive exhibits already filed, the judge noted that two weeks would not be sufficient preparation time.
Additional Provisions and Customer Withdrawals
As part of the agreement, Binance.US will create new crypto wallets inaccessible to global employees, provide further information to the SEC, and agree to an expedited discovery schedule. Importantly, U.S.-based customers will still be able to withdraw their funds during this period.
Addressing SEC Concerns
While the temporary agreement focuses on immediate measures, it does not delve into the broader lawsuit filed by the SEC. The SEC accused Binance and Binance.US of offering and trading unregistered securities, along with alleging fund commingling and poor practices.
SEC’s Perspective and Binance’s Response
SEC Director of Enforcement, Gurbir Grewal, emphasized the importance of protecting investor assets. The agreement seeks to address the alleged misconduct and hold Binance and its CEO, Changpeng Zhao, accountable for potential securities law violations. Binance.US expressed its commitment to defending itself against unwarranted charges, despite the damage caused to its business and reputation.
Safety and Security Assurances
Binance assured users that their funds remain safe and secure on all Binance-affiliated platforms. The company maintains that the SEC’s request for emergency relief was unwarranted and is pleased that the disagreement over the request was resolved on mutually acceptable terms.
UPDATE: Context on the Agreement’s Role
The temporary agreement’s purpose is to address the SEC lawsuit within the broader judicial system. It focuses on immediate measures to ensure the safety of customer funds, while the lawsuit proceeds to resolution.