Key Point
Binance.US has been granted permission by a US court to allow only its employees to access client funds until the ongoing litigation is resolved.
On June 17, Judge Amy Berman Jackson of the United States approved an agreement between Binance.US, and the Securities and Exchange Commission (SEC), thereby lifting a previous temporary restraining order (TRO) that would have frozen all Binance.US assets.
Judge Jackson had expressed a preference on June 14 for the parties to reach an agreement independently rather than having her make a ruling. The parties reportedly reached an agreement on June 16.
Binance.US announced on Twitter, “We are pleased to inform you that the Court did not grant the SEC’s request for a TRO and freeze of assets on our platform which was clearly unjustified by both the facts and the law.”
According to the approved agreement, only Binance.US employees will have access to client funds until the litigation is resolved. US-based customers will retain the ability to withdraw funds throughout this period.
The agreement between the crypto exchange and the US regulator also prevents any access by Binance global officials to private keys of wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools.
Binance.US responded to allegations of funds mismanagement by stating, “There has never been any evidence presented by the SEC concerning mis-use of customer assets. In fact, the SEC lawyers conceded in Court earlier this week, when asked by the Judge, that they had no evidence suggesting that any such thing had occurred.”
John Reed Stark, former chief of the SEC’s Office of Internet Enforcement, noted on Twitter that the agreement includes a “particularly interesting provision” about the repatriation of certain assets to the US.
The agreement reads, “Defendants shall repatriate to the United States, transfer to BAM Trading, and confirm that BAM Trading maintains possession, custody and control in the United States of all fiat currency and crypto assets that are deposited, held, traded, or accrued by customers […].”
Furthermore, the deal asserts that Binance.US must take immediate action to ensure “a verified written accounting” of accounts related to BAM entities valued greater than $1,000.
The SEC filed an emergency motion for a temporary restraining order on Binance.US on June 6, after accusing Binance CEO Changpeng “CZ” Zhao of having access to Binance.US customer funds in a lawsuit. The regulator alleged Zhao moved $12 billion of Binance’s funds through an entity he controlled called Merit Peak.
Ahead of the hearing on the restraining order, Binance.US and Zhao submitted a joint memorandum denying that funds were ever mishandled. According to them, the SEC has been unable to identify a single instance where Binance.US customer funds have been misused.
