Binance.US and US SEC come to an agreement to continue operating and pay employees without seizing the funds.
It is a relief for Binance. The SEC had requested that the funds and other assets on the exchange’s Binance.US trading platform be frozen, but the federal judge had rejected that request. This new development comes just one day after Binance submitted a plea to the court asking it to reject a proposal made by the SEC.
Binance.US and the Securities and Exchange Commission have both agreed to work on an agreement to avoid a full asset freeze, according to US District Judge Amy Berman Jackson, who made the announcement on Tuesday, June 13. According to Jackson, the two sides “aren’t that far apart” in terms of how to safeguard the hundreds of billions of dollars in customer funds without having to shut down the exchange while the lawsuit is being litigated.
Jackson remarked, “The nitty-gritty of it is better handled by you than by me,” during a hearing yesterday. The judge further stated that she would not be required to rule on the SEC’s request to introduce a temporary restraining order if the parties voluntarily agree to a settlement.
Binance.US Is Against Giving Up Control Of Funds
The SEC requested a court order to freeze the funds at Binance.US shortly after bringing a case against the company for allegedly breaking federal securities laws. The federal securities watchdog said that the restraining order would prevent funds from being misused.
Though Binance.US strongly disagreed with the SEC’s request, arguing that stopping the flow of funds would end its operations and eventually harm its clients. Eight days into our case, we are not willing to accept the death penalty, said Binance.US attorneys informed the judge.
Binance continued by saying that the exchange must have enough cash on hand to pay for routine company expenses like paying rent, vendors, and software licenses. “The area that is giving us concern is an asset freeze that will be misinterpreted by banks,” the Binance.US attorney said.
Binance.US And SEC Come To An Agreement
Binance.US proposed a strategy that involves shifting cryptocurrency belonging to US consumers to new wallets with new private keys. Officers at Binance who reside in the US would be the only ones with access to these wallets.
The exchange asked for authorization to carry on paying its employees and meeting its expenses as part of its plan. It guaranteed, however, that no assets would be transferred or payments made to any Binance entity without a judge’s approval.
The SEC asked that Binance bring back client funds to the US in response. In this manner, Zhao’s control of the assets would be distinct from that of entities which can manage client withdrawals.
The SEC is open to a special exception that would permit Binance.US to carry on with its business while the freeze is in place, an SEC attorney said at the hearing. In order to better understand the financial requirements for sustaining the platform, the SEC also asked Binance.US to give details on its expenses and fees.
Binance.US has been ordered by the judge to submit its business expenditures by Wednesday.