Binance, Binance.US and the Securities and Exchange Commission (SEC) announced an agreement to ensure that only Binance.US employees could access customer funds late Friday in the short term.
Under the proposed agreement, which still needs sign-off from the federal judge overseeing the case, Binance.US will take steps to ensure that no officials of Binance Holdings (referring to the global exchange) have access to private keys for their various wallets, hardware wallets or root access to Binance.US’s Amazon Web Services tools. Also, the US-based crypto trading platform will share detailed information about its business expenses, including estimated costs, in the coming weeks.
The proposed deal comes in response to an SEC motion to freeze all of Binance.US̵[ads1]7;s assets while it pursues the exchange on securities-related charges. The regulator said it was concerned that funds could be moved offshore or that records could be destroyed if a temporary restraining order (TRO) was not granted. Binance.US’s lawyers pushed back, saying freezing all assets would amount to a “death penalty.”
Judge Amy Berman Jackson, of the District Court for the District of Columbia, told the parties it would be better for them to agree on a proposed stipulation rather than have her craft a restraining order, noting that a TRO comes with a two-week limit for a more in-depth hearing. Two weeks would be insufficient time to prepare, given the more than 4,000 pages of exhibits the parties have already filed, she said at a hearing earlier this week.
Other provisions of the proposed agreement would see Binance.US create new crypto wallets that the global exchange’s staff do not have access to, provide additional information to the SEC and agree to an expedited discovery schedule.
US-based customers will still be allowed to withdraw money during this time.
The proposed settlement, if accepted, would address some of the SEC’s stated concerns as the broader lawsuit it filed works its way through the court system. The SEC sued Binance and Binance.US last week on allegations of offering and trading unregistered securities, but also alleged massive commingling of funds and bad practices. The proposed agreement does not enter into the wider issue.
UPDATE (June 17, 2023, 05:50 UTC): Adds additional context about the interim agreement’s role in the broader SEC case.