17-6-2023 (LONDON) Binance, Binance.US, and the Securities and Exchange Commission (SEC) have reached a significant agreement regarding the access to customer funds. The deal, announced late Friday, aims to ensure that only Binance.US employees have the ability to access these funds, according to sources familiar with the matter.
The proposed agreement, which still requires approval from the federal judge overseeing the case, outlines several key provisions. Binance.US will take measures to prevent Binance Holdings officials from having access to private keys for its wallets, hardware wallets, and root access to Binance.US’s Amazon Web Services tools. Additionally, the U.S.-based crypto trading platform will share detailed information about its business expenses, including estimated costs, in the coming weeks.
This agreement comes as a response to the SEC’s motion to freeze all of Binance.US’s assets while pursuing the exchange on securities-related charges. The regulatory body expressed concerns that funds could be moved offshore or records could be destroyed if a temporary restraining order (TRO) was not granted. Binance.US’s legal team argued against freezing all assets, deeming it akin to a “death penalty.”
Judge Amy Berman Jackson of the District Court for the District of Columbia suggested that it would be more beneficial for the parties to reach an agreement on a proposed stipulation rather than her crafting a restraining order. She emphasized that a TRO would only provide a two-week timeframe for a more extensive hearing, which would be insufficient given the extensive exhibits already filed by both parties.
The proposed agreement includes additional provisions such as the creation of new crypto wallets that Binance’s global exchange employees cannot access. Binance.US will also provide further information to the SEC and agree to an expedited discovery schedule. During this period, customers based in the U.S. will still be permitted to withdraw funds.
If accepted, this agreement will address some of the SEC’s concerns while the broader lawsuit filed against Binance and Binance.US progresses through the judicial system. The SEC’s lawsuit, filed last week, accuses both entities of offering and trading unregistered securities and raises concerns about fund commingling and inadequate practices. However, the proposed agreement does not delve into the details of the broader lawsuit.
