Binance.US And SEC Strike Deal To Secure Funds

Binance, Binance.US, and the Securities and Exchange Commission (SEC) have reached a proposed deal that aims to secure customer funds by restricting access to Binance.US employees only. The agreement, announced late Friday, still awaits approval from a federal judge overseeing the case.

Binance, BinanceUS and the SEC announced a deal to ensure that only BinanceUS employees could access customer funds. Other provisions in the proposed agreement will see BinanceUS create new crypto wallets that the global exchange's employees have no access to.…

— Wu Blockchain (@WuBlockchain) June 17, 2023

Protecting Binance.US Funds

According to the terms of the proposed agreement, Binance.US will take necessary measures to ensure that officials from Binance Holdings, the global exchange, do not have access to private keys for the platform’s wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. Additionally, the U.S.-based crypto trading platform will provide detailed information about its business expenses, including estimated costs, in the coming weeks.

The proposed deal is a response to an SEC motion seeking to freeze all of Binance.US’s assets while pursuing securities-related charges against the exchange. The regulator expressed concerns about funds being moved offshore or records being destroyed if a temporary restraining order (TRO) was not granted. Binance.US’s legal team argued that freezing all assets would be akin to a “death penalty.”

During a hearing earlier in the week, Judge Amy Berman Jackson of the District Court for the District of Columbia urged the parties to reach a stipulated agreement rather than having her craft a restraining order. She noted that a TRO would only last for two weeks, which would be insufficient time to prepare given the extensive exhibits already filed, consisting of over 4,000 pages.

Apart from restricting access to funds, the proposed agreement includes provisions for Binance.US to create new crypto wallets inaccessible to employees of the global exchange, provide additional information to the SEC, and agree to an expedited discovery schedule. During this time, U.S.-based customers will still be able to withdraw their funds.

If accepted, the proposed agreement will address some of the SEC’s concerns while the broader lawsuit against Binance and Binance.US progresses through the judicial system. The SEC recently filed a lawsuit accusing both entities of offering and trading unregistered securities, along with allegations of fund commingling and poor practices. However, the proposed agreement does not delve into the details of the broader lawsuit.