Binance, the largest cryptocurrency exchange globally, and its U.S. affiliate, Binance.US, have reached an agreement with the U.S. Securities and Exchange Commission (SEC) to keep U.S. customer assets within the United States until the resolution of an ongoing lawsuit.
This information was disclosed in court documents filed on Friday and is pending approval from the federal judge overseeing the case. The agreement aims to prevent U.S. customer assets from being moved offshore and limits access to these assets solely to Binance.US employees.
The SEC filed a lawsuit on June 5 against Binance, its CEO Changpeng Zhao, and Binance.US’s operator, accusing Binance of activities such as artificially inflating trading volumes, diverting customer funds, failing to restrict U.S. customers, and misleading investors regarding market surveillance controls.
This lawsuit, along with a separate one filed by the SEC against U.S. exchange Coinbase, represents an intensified regulatory crackdown on the cryptocurrency industry.
While the agreement does not resolve the SEC lawsuit, it includes measures to ensure that Binance.US officials do not have access to private keys for wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools.
The SEC stated that the emergency relief order obtained for Binance.US customers will safeguard their assets and enable them to continue withdrawing those assets.
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Gurbir Grewal, director of the SEC’s enforcement division, emphasized the necessity of these restrictions, citing concerns about Binance and Changpeng Zhao having control over customer assets and potentially mishandling or diverting them.
Binance responded through a spokesperson, expressing satisfaction that the disagreement over the SEC’s emergency relief request was resolved on mutually acceptable terms while reiterating the commitment to ensuring user funds’ safety on all Binance-affiliated platforms.
“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please… these prohibitions are essential to protecting investor assets,” said Gurbir Grewal, director of the SEC’s enforcement division, in a statement.
In a statement on Saturday, a representative for Binance said, “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 platforms.”
The proposed agreement also entails Binance.US creating new crypto wallets inaccessible to employees of the global Binance exchange, providing additional information to the SEC, and agreeing to an expedited discovery schedule.
In response to the SEC’s request to freeze Binance.US’s assets, the U.S. affiliate suspended dollar deposits and set a June 13 deadline for customers to withdraw their dollar funds.
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