The Securities and Exchange Commission (SEC) and Binance have reached an agreement that allows the cryptocurrency exchange to continue operating in the US until the resolution of the SEC’s lawsuit filed earlier this month. The lawsuit alleges that Binance, along with its founder Changpeng Zhao (CZ), artificially inflated trading volumes, mismanaged customer assets, and failed to restrict US investors from trading on Binance.com instead of the separate US system as required.
Following the charges, the SEC attempted to freeze Binance’s US assets to protect customer funds and prevent potential transfer of money abroad. However, Binance argued that an asset freeze would force them out of business in the US. The judge overseeing the litigation ordered both parties to come to a compromise that safeguards customer assets.
In a court filing seen by The New York Times, the SEC announced on Friday that Binance has agreed to relocate all assets belonging to US customers within the US. Furthermore, Binance’s US operation is prohibited from granting access or control of domestic assets or funds to Binance’s international operation or Zhao. During the resolution of the litigation, Binance.US is only permitted to transfer assets for necessary expenses and obligations incurred in the normal course of business. Additionally, the exchange must create new customer wallets inaccessible to its international employees. However, the agreement still requires approval from Judge Amy Berman and does not resolve the SEC lawsuit.
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…
— CZ 🔶 Binance (@cz_binance) June 17, 2023
“Given that Changpeng Zhao and Binance have control over the platforms’ customers’ assets and have been able to mix and divert these assets as alleged, these restrictions are necessary to protect investor assets,” the SEC stated on Saturday. “Furthermore, we ensured that US customers will be able to withdraw their assets from the platform while we address the alleged misconduct and hold Zhao and the Binance entities accountable for violating securities laws.”
Zhao shared his thoughts on Twitter about the deal on Saturday morning. He stated, “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 will always be safe and secure on all Binance-affiliated platforms.”
The SEC’s lawsuit against Binance is part of its broader crackdown on the cryptocurrency industry. Previously, the agency accused FTX founder and former CEO Sam Bankman-Fried of being involved in a multi-year scheme to defraud investors. The SEC also filed a complaint against Coinbase, the largest US crypto trading platform, for alleged failure to register as a broker, national securities exchange, or clearing agency.
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Deepak Sen is a tech enthusiast who covers the latest technological innovations, from AI to consumer gadgets. His articles provide readers with a glimpse into the ever-evolving world of technology.
