February 23, 2024

Federal Judge Approves Temporary Agreement in SEC Lawsuit Against Binance and Binance.US

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In a significant development in the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and global crypto exchange Binance and its U.S. affiliate, a federal judge has signed off on a temporary agreement. The agreement mandates that Binance.US takes immediate steps to ensure that only local employees have access to customer funds while the SEC lawsuit is being resolved. The decision by Judge Amy Berman Jackson paves the way for further discussions and proposals related to the broader lawsuit.

Under the temporary agreement, Binance.US is required to implement measures to prevent officials from Binance Holdings, the global exchange, from accessing private keys for wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. The U.S.-based crypto trading platform will also provide detailed information about its business expenses, including estimated costs. This agreement comes in response to an SEC motion to freeze Binance.US’s assets during the litigation, with the regulator concerned about the potential movement of funds offshore or destruction of records.

Judge Jackson urged the parties involved to reach a stipulation agreement rather than having her impose a restraining order. She emphasized the need for adequate time to prepare, considering the extensive exhibits already filed, totaling over 4,000 pages. The proposed agreement includes additional provisions such as the creation of new crypto wallets inaccessible to global employees, providing further information to the SEC, and an expedited discovery schedule. Importantly, U.S.-based customers will still be able to withdraw funds during this period.

The temporary agreement aims to address the SEC’s concerns regarding the alleged commingling of funds and poor practices while the broader lawsuit progresses. The SEC filed the lawsuit against Binance and Binance.US last week, accusing them of offering and trading unregistered securities. SEC Director of Enforcement Gurbir Grewal emphasized the importance of protecting investor assets and holding Binance accountable for any alleged securities law violations. The proposed agreement does not delve into the specifics of the broader suit.

Binance.US, in a tweet, acknowledged the damaging impact of the legal battle on their business and reputation but expressed their determination to defend themselves against what they consider unwarranted charges. Similarly, a spokesperson from Binance stated that while they believe the SEC’s emergency relief request was unnecessary, they are pleased that the disagreement over the request has been resolved. They reassured users that their funds remain secure on all Binance-affiliated platforms.

The temporary agreement approved by the federal judge marks a significant step in the SEC lawsuit against Binance and Binance.US. By ensuring that only local employees can access customer funds, the agreement addresses the SEC’s concerns and protects investor assets during the ongoing legal proceedings. As discussions and proposals unfold, the resolution of this high-profile case will have far-reaching implications for the crypto industry and the regulatory environment surrounding digital assets. If Binance should violate any terms of this temporary agreement it could have heavy implications for the company, their customers and the tokens they have listed.

Terry Jones
Technology/Digital Assets Desk

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