The U.S. Securities and Exchange Commission (SEC) and Binance have reached an unprecedented agreement aimed at expediting the case and ensuring the protection of U.S. customers’ assets within the country, according to court filings on June 16. Judge Amy Jackson has approved the agreement, but she rejected the SEC’s request for a temporary restraining order (TRO) to freeze Binance.US’ assets. Previously, she had urged both parties to negotiate an agreement to prevent a complete asset freeze. The SEC sought an asset freeze due to concerns regarding the commingling of funds and the potential movement of assets outside the U.S. Gurbir Grewal, the Director of the SEC’s Division of Enforcement, stated on June 17 that asset freeze measures were necessary to safeguard investor assets, considering the alleged control of customer assets by Changpeng Zhao and Binance, as well as the alleged ability to commingle or divert these assets.
Binance.US and Changpeng Zhao (CZ) have vehemently denied all allegations, accusing the SEC of attempting to stifle the cryptocurrency industry through heavy-handed tactics. Following the approval of the agreement, Binance.US issued a statement asserting that the SEC had presented no evidence of customer asset misuse. In fact, during court proceedings earlier that week, SEC lawyers reportedly acknowledged, in response to a judge’s inquiry, that they had no evidence suggesting such misconduct had occurred.
The agreement, referred to as the “Proposed Stipulation and Consent Order,” permits Binance.US to continue normal operations throughout the litigation process. It also severs the alleged connection between Binance Holdings and Binance.US (legally known as BAM Trading), and contains provisions for the repatriation of all assets originating from the U.S. that may have been moved outside the country. The agreement includes an emergency asset relief provision requested by the SEC, allowing Binance.US customers to access and withdraw their funds from the platform during the litigation. Grewal emphasized that the SEC ensured U.S. customers would be able to retrieve their assets while working to resolve the alleged misconduct.
Binance.US assumes sole responsibility for overseeing the funds and has been entrusted with preventing Binance Holdings officials from accessing its wallets, private keys, and Amazon Web Services tools. The agreement stipulates that Binance.US must transfer all customer funds to new wallets accessible solely by its employees. Additionally, Binance.US can only spend the necessary funds for essential day-to-day operations. To expedite the proceedings, the consent order mandates that all defendants, including Binance, provide expedited discovery and sworn testimony to the SEC, significantly reducing the time required to reach a resolution. The order also requires Binance.US to provide “verified written accounting” of all accounts and transfers made between December 31, 2022, and the accounting date.
Judge Jackson, presiding over the Binance-SEC case, will also issue preliminary rulings on whether certain cryptocurrencies qualify as securities under the law. This assessment will have far-reaching implications for the crypto industry in the U.S. The SEC has identified several tokens, such as Cardano, Solana, Polygon, and BNB, as potential securities in the cases against both exchanges.