In a recent development, a federal judge rejected the SEC’s demand to freeze the funds and other assets on the Binance.US trading platform. This comes as a relief for the cryptocurrency exchange, which has been facing heightened scrutiny. Previously, Binance had made a similar request for the court to disapprove the SEC’s proposal.
US District Judge Amy Berman Jackson noted that both parties – Binance.US and the Securities and Exchange Commission – have agreed to work on a deal to avoid a total asset freeze. According to Jackson, the two sides “aren’t that far apart” on finding ways to protect billions of dollars in customers’ funds without completely shutting down the exchange during the ongoing lawsuit. Furthermore, she explained that if the parties can reach a mutual agreement, there would be no need for her to rule on the SEC’s request for a temporary restraining order.
Binance.US, on the other hand, is firmly against giving up control over its funds. When the SEC filed the lawsuit accusing the exchange of violating federal securities laws and demanded a freeze on its funds, Binance.US pushed back. The exchange argued that blocking the flow of funds would not only hurt their business but also their customers. Moreover, Binance.US needs to maintain sufficient funds to cover ordinary business expenses, such as salaries, rent, vendor payments, and software licensing.
In an attempt to reach a compromise, Binance suggested a plan that involved transferring US customers’ cryptocurrency to new wallets with new private keys. The exchange added that only officers based in the US at Binance.US would control these wallets. As part of this plan, the exchange asked for permission to continue paying employees and covering expenses, while also ensuring that no assets would be transferred or payments made for the benefit of other Binance entities without a judge’s approval.
In response, the SEC proposed that Binance should bring back customer assets to the US, putting them under the control of entities not overseen by their CEO, Changpeng Zhao. This measure would enable customer withdrawals to be handled more efficiently. The SEC also showed openness to specific exceptions that would allow Binance.US to continue operating under certain conditions during the freeze. To better understand the financial requirements for maintaining the platform, the SEC requested that Binance.US provide details about its expenses and fees.
Moving forward, the judge has asked Binance.US to submit their business expenses by a specified deadline. While it remains to be seen how the two parties will arrive at a final agreement, this development highlights the complexities of regulating cryptocurrency exchanges and the need for a balance between investor protection and fostering innovation in the rapidly evolving blockchain industry.
Source: Coingape
