Binance and SEC reach deal to prevent asset freeze in US

Customer funds from Binance.US will be securely stored in digital repositories exclusive to the US exchange, allowing for authorized asset transfers

In a bid to prevent a complete freeze of its assets in the US, Binance has reached an agreement with the Securities and Exchange Commission (SEC). The deal, which was approved by Judge Amy Berman Jackson, allows the world's largest cryptocurrency exchange to continue operating in the country while protecting customer assets.

The SEC filed fraud charges against Binance earlier this month, seeking to freeze the exchange's US assets. However, after several days of court-ordered mediation, the two parties reached a compromise. Under the agreement, funds belonging to customers of Binance.US, the exchange's affiliate, will be placed in digital repositories accessible only to the US exchange. The deal also ensures that Binance.US can transfer assets for necessary business expenses.

While Binance expressed its belief that the SEC's emergency relief request was unwarranted, the exchange stated that it was pleased with the resolution on mutually acceptable terms. Gurbir Grewal, the SEC's Director of Enforcement, emphasized that US customers would still be able to withdraw their assets during the ongoing resolution of the alleged misconduct, despite the company having halted deposits and withdrawals in the US last week.

The dispute over Binance's assets is part of a larger legal battle that holds significant implications for the future of the cryptocurrency industry in the US. The SEC has recently intensified its crackdown on the sector, targeting not only Binance but also Coinbase, its largest US rival. Some crypto companies have chosen to fight the regulatory pressure in court, while others are considering relocation to countries with more lenient regulations.

This agreement, specifically focused on safeguarding customer assets in the US, represents the first step in what is likely to be a series of legal clashes. The SEC's civil fraud lawsuit against Binance and its founder, Changpeng Zhao, alleges mishandling of customer deposits, misleading regulators, and allowing market manipulation on the exchange.

The SEC had argued that an asset freeze was necessary to protect user funds and prevent money from being moved abroad. However, Binance countered that the proposal was overly punitive and would cripple its operations. The exchange is also facing legal action from the Commodity Futures Trading Commission and a federal investigation into Zhao.

While Judge Jackson expressed scepticism about the SEC's enforcement approach, she also dismissed Binance's claim of surprise regarding the SEC's actions. The agreement reached between Binance and the SEC aims to strike a balance, ensuring customer asset protection while allowing the legal proceedings to move forward.

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Written by Silvia Pavlof

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