Court rejects SEC request to freeze Binance.US assets, approves agreement to expedite case

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Court rejects SEC request to freeze Binance.US assets, approves agreement to expedite case

Court rejects SEC request to freeze Binance.US assets, approves agreement to expedite case Assad Jafri · 21 hours ago · ...

Court rejects SEC request to freeze Binance.US assets, approves agreement to expedite case Court rejects SEC request to freeze Binance.US assets, approves agreement to expedite case Assad Jafri · 21 hours ago · 3 min read

Judge Amy Jackson approved the agreement but rejected the SEC’s request to freeze Binance.US’ assets using a temporary restraining order.

3 min read

Updated: June 17, 2023 at 7:08 pm

Court rejects SEC request to freeze Binance.US assets, approves agreement to expedite case

Cover art/illustration via CryptoSlate

Upland: Berlin Is Here!

The U.S. SEC and Binance have signed an unprecedented agreement to expedite the case and ensure that U.S. customers’ assets remain in the country, according to June 16 court filings.

Judge Amy Jackson approved the agreement but rejected the SEC’s request to freeze Binance.US’ assets via a temporary restraining order (TRO). She had previously told both parties to negotiate an agreement among themselves to avoid a total asset freeze.

The SEC requested an asset freeze because of concerns around the commingling of funds and fears that the exchange would shift assets outside the U.S.

Director of SEC’s Division of Enforcement, Gurbir Grewal, said in a statement on June 17:

“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, as we have alleged, these prohibitions are essential to protecting investor assets.”

Binance.US and CZ have denied all allegations and said that the SEC is “trying to kill the crypto industry” using heavy-handed tactics.

Binance.US said in a statement following approval of the agreement:

“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.”

Proposed Stipulation and Consent Order

The agreement — dubbed “Proposed Stipulation and Consent Order” — essentially allows Binance.US to continue operations as usual despite the litigation.

Additionally, it severs the alleged connection between Binance Holdings and Binance.US — which is officially known as BAM Trading in legal filings. It also includes provisions on “repatriating” all assets that originated from the U.S. and may have been moved outside the country.

The agreement includes an emergency asset relief provision requested by the SEC which will allow Binance.US customers to access and withdraw their funds from the platform during litigation.

Grewal said:

“We ensured that U.S. customers will be able to withdraw their assets from the platform while we work to resolve the alleged underlying misconduct.”

Binance.US will be the sole overseer of the funds and has also been tasked with ensuring that Binance Holdings officials cannot access its wallets, private keys, and its Amazon Web Services tools.

The agreement also stipulates that Binance.US will move all customer funds into new wallets that only its employees are able to access. Furthermore, Binance.US can only spend the money it needs for essential day-to-day operations.

Expedited discovery

The crypto community has been speculating that the SEC’s cases against Coinbase and Binance will take months if not years to conclude. This caused many industry participants to consider focusing their growth efforts outside the U.S.

However, the consent order intends to speed up the proceedings in Binance’s case with the SEC by having all defendants provide expedited discovery and sworn testimony to the SEC — significantly reducing the time it will take to reach a conclusion.

It also mandates Binance.US with providing “verified written accounting” of all accounts and transfers made between December 31, 2022 and the date of accounting.

Crypto or security?

Judge Jackson, who is overseeing the Binance-SEC case, will also make preliminary rulings on whether certain cryptocurrencies are in fact securities under the law as part of the litigation.

Some of the tokens the SEC has listed as securities in the cases against the two exchanges include Cardano, Solana, Polygon and BNB, among others.

The preliminary judgements around these tokens will likely have a far reaching impact on the crypto industry in the U.S.

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