The US SEC and Binance have signed an unprecedented agreement to expedite the case and ensure US client assets remain in the country, according to June 16 court documents.
Judge Amy Jackson approved the deal but denied the SEC’s request to freeze Binance.US assets via a temporary restraining order (TRO). She had previously told the two sides to negotiate a deal between themselves to avoid a total asset freeze.
The SEC has requested an asset freeze due to concerns about the mix of funds and fears that the exchange could move assets outside of the United States.
SEC Enforcement Division Director Gurbir Grewal said in a statement June 17:
“Given that Changpeng Zhao and Binance control platform client assets and have been able to mix client assets or misappropriate client assets as we have alleged, these prohibitions are essential to protect investors’ assets. .”
Binance.US and CZ denied all allegations and said the SEC was “trying to kill the crypto industry” using heavy-handed tactics.
Binance.US said in a statement after approval of the agreement:
“There has never been any evidence presented by the SEC regarding the misuse of client assets. In fact, SEC attorneys acknowledged in court earlier this week, at the judge’s request, that they had no evidence to suggest such a thing had happened.
Proposed Stipulation and Consent Order
The agreement – dubbed the “Proposed Stipulation and Consent Order” – essentially allows Binance.US to continue operations as usual despite the litigation.
Additionally, it severs the alleged link between Binance Holdings and Binance.US – which is officially known as BAM Trading in legal documents. It also includes provisions for the “repatriation” of all assets originating in the United States and likely to have been moved outside the country.
The agreement includes an SEC-mandated emergency asset relief provision that will allow Binance.US customers to access and withdraw their funds from the platform during the litigation.
grewal said:
“We have ensured that US clients will be able to remove their assets from the platform while we work to resolve the alleged underlying misconduct.”
Binance.US will be the sole supervisor of the funds and has also been tasked with ensuring that Binance Holdings officials cannot access its wallets, private keys, and Amazon Web Services tools.
The agreement also stipulates that Binance.US will transfer all customer funds into new wallets that only its employees can access. Additionally, Binance.US can only spend the money it needs for essential day-to-day operations.
Accelerated discovery
The crypto community has speculated that the SEC cases against Coinbase and Binance will take months, if not years, to close. This has caused many industry players to consider focusing their growth efforts outside of the United States.
However, the consent order is intended to expedite the proceedings in the Binance case with the SEC by requiring all defendants to provide expedited discovery and sworn testimony to the SEC, significantly reducing the time it will take. to come to a conclusion.
It also instructs Binance.US to provide “verified written accounting” of all accounts and transfers made between December 31, 2022 and the accounting date.
Crypto or security?
Judge Jackson, who is overseeing the Binance-SEC case, will also issue preliminary rulings on whether certain cryptocurrencies are in fact securities under law in the litigation.
Some of the tokens that the SEC has listed as securities in business against the two exchanges include Cardano, Solana, Polygon, and BNB, among others.
Preliminary judgments regarding these tokens are likely to have a huge impact on the crypto industry in the United States.
