Binance has agreed to repatriate its US customers’ assets
Binance and its US subsidiary, Binance.us have reached an agreement with the US Securities and Exchange Commission (SEC) to avoid freezing of the exchange’s assets.
The deal will see the largest exchange keep the assets and funds of its US customers onshore in return for comprehensive transparency and oversight.
Binance avoids restraining order
June 17 saw the US district court Judge Amy Berman Jackson approve a consent order between Binance, Binance.us, and the SEC. The order dismissed the previous temporary restraining order that had purported to freeze the assets of Binance.us.
Judge Jackson said she would prefer the parties to reach an agreement independently rather than have her rule. The parties reached an agreement on June 16.
The consent order signed by the judge followed the SEC filing for an emergency temporary order to freeze the assets of Binance.us holding companies and the repatriation of the same to the US.
“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,” Binance.US said on Twitter.
According to the agreement, Binance Holdings officials, including Binance CEO Changpeng Zhao, will not be able to access and have control over these assets. The assets and funds cannot be transferred to them, and will stay onshore within domestic control.
The SEC said on Saturday that the agreement imposes upon Binance the responsibility to grant the regulatory agency oversight over its expenses. In addition, the defendants are banned from spending the corporate assets of the company on anything other than “in the ordinary course of business.”
Binance maintains SEC application was unnecessary
On June 6, the SEC filed an emergency motion for a restraining order on Binance.us after alleging that Zhao had access to customers’ funds. The US regulator also said that Zhao moved $12B through Merit Peak, an entity he controlled.
During a hearing last week Tuesday, the crypto exchange argued that assets of customers were safe, claimed that blocking the flow of funds will only detract business, and the SEC application will only harm customers as the motion wasn’t necessary.
Judge Jackson also said that shutting down the platform “would create significant consequences not only for the company but for the digital asset markets in general.”
A spokesperson for the exchange said in a statement on Saturday: “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.”
Former SEC Office of Internet Enforcement chief John Reed Stark said the deal was “unprecedented, exhaustive, and onerous.”
“This consent order will be one of the most burdensome, awkward, inconvenient and far-reaching crypto-related orders in SEC history,” Stark observed on Twitter. “The SEC has been given a role akin to a Binance independent consultant, a remedy often granted to the SEC after the SEC prevails in an enforcement action.”
The case comes on the heels of charges filed by the Commodities Futures and Exchange Commission against the exchange, and also another investigation into its subsidiary in France over illegal trading and money laundering. The crypto exchange announced it will be exiting the Netherlands last week for failing to meet AML standards.
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