Key Takeaways:
- Court ordered the SEC and Binance.US to work towards a compromise.
- The exchange had filed an opposition to the relief that the SEC sought.
PATNA (CoinChapter.com) — Binance.US and US Securities and Exchange Commission have agreed to negotiate a deal to help the exchange avoid a total asset freeze.
A June 14 Bloomberg report stated that US District Judge Amy Berman Jackson highlighted that the SEC and Binance.US were not “that far apart” regarding their demands.
Judge Jackson noted that the SEC and the exchange wanted to protect billions of dollars of customer funds without shutting down Binance.US.
Furthermore, both the SEC and the Binance defendants submitted consent orders. In detail, consent orders are settlement agreements that get approval from the court.
Interestingly, the consent orders submitted by both parties portray many conflicts, former SEC enforcement attorney John Reed Stark noted in a tweet.
Judge Jackson referred the parties to a magistrate judge to ratify the details of the compromise agreement.
The nitty-gritty of it is better handled by you than by me
Judge Amy Berman Jackson told both parties
The SEC requested the court freeze the exchange’s assets after filing its lawsuit against Binance Holdings Ltd. and its CEO, Changpeng Zhao. SEC justified its request by stating that Binance and its entities mishandled customer funds, broke security rules, and misled investors.
Prior to the court’s order, the exchange had twice presented the SEC with stipulations addressing all its concerns. However, the regulator rejected the offers each time.
Customer Assets Safe, Says Binance.US
During the hearing, Binance.US assured the court that customer assets were safe regardless of what the SEC claimed. Moreover, in a previous motion, the defendants had called the SEC’s demands “unnecessary and unjust.”
Also Read: Binance Lawsuit: Binance.US Refutes All THE SEC Allegations, Zhao Opposes Restraining Order
The exchange’s lawyers told the court that the freeze would undermine the exchange’s to perform day-to-day operations, such as paying rent, employee salaries, vendors, etc.
One of the Binance.US lawyers deemed the SEC’s demands similar to getting a “death penalty eight days into our case.”
Judge Jackson agreed with the defendant. saying
Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general.
As part of the compromise proposal, Binance.US has pledged not to transfer any asset or make payments for any Binance entity without the court’s permission. The SEC stated it was open to leaving an exception to the asset freeze that would allow the exchange to cover its operational expenses.
On the other hand, the SEC asked that Binance.US return customer assets to the US. The regulator argued that the assets should be under entities that can handle redemptions for customers while being out of reach of Zhao.
Binance Seeks Deregistration As Crypto Service Provider In Cyprus
Meanwhile, A Reuters report stated that Binance’s Cyprus Unit has applied for removal from the country’s register of crypto asset service providers. However, it was unclear when the exchange applied for the deregistration.
Binance announced a class 3 registration as a crypto asset service provider in Oct 2022. However, a source told Reuters that the exchange never launched its business in the region. The Cyprus registration allowed the exchange to offer spot trading, custody, and other services in the region.
With the SEC lawsuit ongoing, the decision to uproot from Cyprus could add to the FUD in the market.
