The Securities and Exchange Commission reached a settlement with Binance late Friday that will allow the world’s largest cryptocurrency exchange to operate in the United States and protect customer assets as the company battles a government lawsuit.
after filing fraud charges Against Binance on June 5, the SEC moved to freeze the firm’s US assets in a move Exchange lawyers said would put it out of business in the United States.
But in a court filing on Friday, the SEC said the two sides had reached a settlement after several days of court-ordered mediation. The deal must be approved by Judge Amy Berman Jackson, who is overseeing the case in federal court in Washington.
Under the agreement, funds belonging to Binance.US customers will go to a special digital repository accessible only to the US exchange — and not to Binance’s larger international operations or its founder, Changpeng Zhao. The deal stipulates that Binance.US may transfer company assets “only to pay for expenses or to satisfy obligations incurred in the ordinary course of business.”
Lawyers for the company’s large offshore exchange affiliate, Binance.US, did not immediately respond to a request for comment.
In a statement On Saturday, Gurbir Grewal, SEC’s director of enforcement, said, “We have ensured that US customers will be able to withdraw their assets from the platform while we work to resolve the alleged underlying misconduct.”
The dispute over Binance’s assets was part of a high-stakes legal battle that could determine the future of the crypto industry in the United States.
In recent months, the SEC has launched an aggressive industry crackdown, suing Binance as well as its biggest US rival. crypto exchange coinbase, With regulatory pressure intensifying, some crypto companies have vowed to fight in court, while others are looking to Options Outside the United StatesCamping for countries with more lenient rules.
The settlement will resolve the first of many legal conflicts to come in order to protect customers’ assets in the United States. In a wide-ranging civil fraud lawsuit, the SEC accused Binance and Mr. Zhao of mishandling customer deposits, lying to regulators and allowing market manipulation on the exchange.
In court filings, the SEC said that an asset freeze was necessary to ensure that Binance did not jeopardize user funds or attempt to move funds overseas. But the company said the SEC’s proposal was overly punitive and would prevent the firm from paying employees and vendors, causing its operations to “quickly grind to a halt.”
binance also sued earlier this year by the Commodity Futures Trading Commission, and Mr. Zhao is under investigation by federal prosecutors. The company has argued that the SEC is unfair in going after the business and its founder. Four major law firms are representing Binance and Mr. Zhao, known as CZ, in the litigation in Washington.
At a court hearing in Washington on Tuesday, Judge Jackson expressed some skepticism over the SEC’s strategy of using enforcement actions to impose regulatory oversight on the crypto world. She called the approach “inefficient and cumbersome” and it’s one reason she urged the parties to negotiate a deal to protect customer assets in the United States.
But Judge Jackson also cut short Binance’s argument, surprised by SEC’s aggressiveness
According to court filings, the SEC has been investigating Binance since 2020. “Some of the surprise expressed in the submission rings a little hollow,” she told Binance’s lawyers on Tuesday.
