Binance.US and SEC find common ground, preventing asset freeze and safeguarding customer funds in collaborative efforts.
In an attempt to avoid a complete asset freeze on the cryptocurrency trading platform, Binance.US and the Securities and Exchange Commission have embarked on a mission to find common ground and reach a compromise.
The SEC had initially sought an asset freeze for Binance.US, a prominent trading platform owned by Changpeng Zhao, the founder of Binance Holdings. The accusations against the platform include mishandling customer funds, misleading investors and regulators, and violating securities rules.
Binance.US, vigorously contesting the commission’s lawsuit and asserting the safety of customer assets, argued that a complete halt in fund flow would have detrimental effects on its business operations, thereby harming its valued customers.
A recent Bloomberg report revealed that US District Judge Amy Berman Jackson acknowledged the potential consequences of shutting down Binance.US entirely and expressed optimism about finding a solution that safeguards billions of dollars in customer funds while the SEC’s lawsuit progresses. Consequently, she referred the parties involved to a magistrate judge to facilitate a compromise agreement.
Binance.US Proposes Secure Transfer of US Customer Crypto Assets
Binance.US, in its proposed compromise, suggested transferring US customer crypto assets to new wallets under the sole control of US-based officers on the platform. The intention behind this proposal is to ensure ordinary business expenses, including rent, salaries, vendor payments, and software licensing, can still be covered.
During the hearing, Judge Jackson sided with Binance.US in acknowledging the significant ramifications of a complete shutdown, not only for the company but also for the broader digital asset markets. She emphasized that the intricate details of the compromise should be handled by the magistrate judge.
Additionally, Binance.US has sought permission to continue paying employees and covering operational costs as part of its proposal to avoid a comprehensive asset freeze on its cryptocurrency trading platform.
One SEC attorney expressed the regulator’s openness to a narrowly-tailored exception to the freeze, allowing Binance.US to manage its day-to-day operations. To gain a better understanding of the requirements for maintaining platform operations, the SEC requested Binance.US to provide a comprehensive breakdown of its business expenses and professional fees. In response, the judge ordered the company to submit a list of its business expenses by Wednesday.
Furthermore, the SEC’s compromise proposal, submitted to the court, outlined its desire for Binance to repatriate customer assets to the United States. This would ensure that these assets fall under the control of entities beyond the reach of Changpeng Zhao, allowing for the smooth processing of customer redemptions.