A judge in Washington decided to give Binance US and the Securities and Exchange Commission (SEC) time to work out a deal to avoid the freezing of the exchange’s assets. The two sides are close to an agreement that will protect customer funds without paralyzing the crypto trading platform.
Crypto Exchange Binance US and SEC Near Compromise to Avoid Asset Freeze
Binance US, the United States-based subsidiary of the world’s leading digital asset exchange, Binance, and the U.S. securities regulator, the SEC, have agreed to work on a deal which would spare the court from the need to decide whether to freeze the platform’s assets.
During a hearing on Tuesday, U.S. District Judge Amy Berman Jackson announced that the exchange and the Commission “aren’t that far apart” on a compromise ensuring that billions of U.S. dollars’ worth of customer funds are protected without crippling the crypto business.
The SEC had requested a temporary restraining order for the assets on Binance US for the duration of a lawsuit it filed against the entities operating Binance and Binance US, as well as their founder, Changpeng Zhao, in which they were accused of mishandling users’ funds and misleading investors and regulators.
The exchange’s defense attorneys sought its rejection, alleging that the regulator “manufactured” an “emergency.” At the hearing, they insisted that customer assets are safe, emphasizing that blocking transactions would in fact hurt customers. A lawyer was also quoted by Bloomberg as stating:
We are not willing to accept the death penalty eight days into our case.
The defense team argued that Binance US needs to be able to cover its business expenses, including paying employees and vendors. Judge Jackson agreed that shutting down the exchange “would create significant consequences not only for the company but for the digital asset markets in general.”
Jackson also said that if the two sides strike a deal, she would no longer need to rule on the SEC’s request. “The nitty-gritty of it is better handled by you than by me,” she reasoned while referring them to a magistrate judge in order to finalize the agreement.
The SEC lawsuit alleges that transferred customer funds to an entity controlled by Zhao and that they were later used to buy and sell cryptocurrency. The compromise proposed by the exchange envisages moving crypto assets of U.S. customers to new wallets that would be under the control of U.S.-based officers at Binance.US. The SEC’s proposal is similar, to require Binance to repatriate customer assets to the United States.
Do you think Binance and the SEC will reach an agreement to avoid freezing the exchange’s assets? Tell us in the comments section below.