SEC and Binance Agree on Measures to Secure US Customer Assets Amid Legal Dispute - Investor Bites

SEC and Binance Agree on Measures to Secure US Customer Assets Amid Legal Dispute – Investor Bites

Time Stamp: June 17, 2023 4:57 AM
SEC and Binance Agree on Measures to Secure US Customer Assets Amid Legal Dispute - Investor Bites PlatoBlockchain Data Intelligence. Vertical Search. Ai.

SNEAK PEEK

  • SEC and Binance propose an agreement to safeguard US customer funds.
  • Binance.US aims to limit access to customer funds to its employees.
  • The agreement is a crucial step amidst a broader ongoing lawsuit.

In a significant development, Binance, Binance.US, and the US Securities and Exchange Commission (SEC) have put forth a tentative agreement. This proposal seeks to reassure customers and regulatory bodies alike by strengthening the custody of US customer funds and assets.

The proposed agreement, awaiting federal judge approval, primarily stipulates that only Binance.US employees can access US customer funds. Binance.US, a central US-based crypto trading platform, intends to ensure that Binance Holdings, the global parent exchange, officials are denied access to its private keys. This includes the keys to various wallets, hardware wallets, and root access to the exchange’s Amazon Web Services tools.

In addition to these measures, Binance.US is also poised to share exhaustive information about its business expenses. This transparency would include anticipated costs, providing further insight into the financial operations of the exchange.

The SEC’s initial move to freeze Binance.US’s assets had driven the exchange to consider this arrangement. The regulatory body had expressed concerns about potential offshore fund transfers or record destruction, justifying their request for a temporary restraining order (TRO). However, Binance.US’s legal representatives protested, stating that an asset freeze equates to a business “death penalty.”

Judge Amy Berman Jackson, from the District Court for the District of Columbia, prompted both parties to agree. She noted that the typical two-week limit for a TRO would be insufficient given the complexity and sheer volume of exhibits already filed in the case.

This proposed agreement also includes additional provisions for Binance.US. It will involve the creation of new crypto wallets inaccessible to the global exchange’s employees. Furthermore, the exchange will provide additional information to the SEC and consent to an expedited discovery schedule.

While the proposed agreement does not address the SEC’s broader lawsuit against Binance and Binance.US, it does deal with some pressing concerns. Last week, the SEC initiated legal action against Binance and Binance.US for alleged offering and trading of unregistered securities, poor practices, and extensive commingling of funds.

While the proposal significantly strides towards resolving some pressing concerns, the broader lawsuit is still ongoing. The legal tug-of-war represents an essential chapter in the evolving relationship between crypto exchanges and regulatory authorities. The outcome may shape not only the future of Binance but also the regulatory landscape of crypto assets in the US.

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