Binance.US and SEC Negotiate to Avoid Total Asset Freeze

Binance.US and SEC Negotiate to Avoid Total Asset Freeze

Binance.US, the US affiliate of cryptocurrency
exchange, Binance, and the Securities and Exchange Commission (SEC) are working
on an agreement to avoid a total freeze of the exchange’s assets. The
negotiations are currently before a magistrate court. According to the
information shared with Bloomberg today (Wednesday), US District Judge Amy
Berman Jackson said the agreement is important to protect investors’ funds
without closing the exchange’s operations while the case proceeded.

Temporary Restraining
Order

Finance Magnates
reported on May 7 that the SEC had filed
a motion to obtain a
temporary restraining order to freeze the assets of BAM Management US Holdings
and BAM Trading Services, the holdings and operating company affiliated with
Binance.US. The motion was
accompanied with a separate filing demanding 'a show cause’ from the exchange and
the defendants in the case on why a preliminary injunction should not be
granted.

Furthermore, the SEC asked the court to order Binance to repatriate assets held for the benefit of BAM customers as the case continues. The watchdog had previously alleged that Binance and Binance.US commingled customer assets or divert them to two entities controlled by Changpeng Zhao, Binance’s CEO.

However, in the ongoing negotiation deal, Binance.US through its lawyer argued that such an order could negatively affect its operations because the exchange
needed to cater to its operating expenses like rent, salaries,
vendors, and licenses. The request was accepted by the judge,
saying shutting the exchange could also affect the entire digital asset space.

Transfer of Assets to
New Wallet

Meanwhile, Binance had earlier proposed a compromise
with the regulator that includes moving US customers’ cryptocurrency holdings to a
new digital wallet with new private keys to be controlled only by staff members that are part of the Binance.US team. But the SEC declined the request, saying the assets should be
controlled, instead, by entities not connected to Zhao.

Besides, the SEC asked
that Binance.US provide an accounting of its business expenses and
professional fees so that the government agency can get an understanding of how the operations of the company were done. Regarding the matter, the judge agreed that Binance.US file a list of its business expenses by Wednesday.

Earlier in the month, the US securities watchdog sued Binance for, among other things, allegedly operating an illegal trading platform, selling unregistered crypto assets securities and commingling customers’ funds. Specifically, the regulator accused Binance.US of moving billions of dollars to accounts controlled by Zhao, contrary to earlier claims the company was independent of its parent.

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This article was written by Jared Kirui at www.financemagnates.com.

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