Binance.US, the US affiliate of cryptocurrency exchange, Binance, and the Securities and Exchange Commission (SEC) are collaborating on an agreement to avoid a total freeze of the exchange's assets. Currently, the negotiations are being conducted before a magistrate's 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 shuttering the exchange's operations while the case proceeded.
Temporary Restraining Order
Finance Magnates reported on June 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 accompanied a separate filing demanding 'a show cause' from the exchange and the defendants to justify why a preliminary injunction should not be granted.
Furthermore, the SEC requested the court to order Binance to repatriate assets held for the benefit of BAM customers as the case continues. Previously, the watchdog alleged that Binance and Binance.US had commingled customer assets or diverted them to two entities that are controlled by Changpeng Zhao, Binance's CEO.
However, in the ongoing negotiation deal, Binance.US's lawyer disputed 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 affect the entire digital asset space.
Transfer of Assets to New Wallet
Earlier, Binance had 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 this, the SEC urged that Binance.US provides an accounting of its business expenses and professional fees so that the government agency can comprehend how the company conduct its operations. 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 transferring billions of dollars to accounts controlled by Zhao, contrary to earlier claims the company was independent of its parent company.
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