Provisional Asset Control Framework
Binance, Binance.US, and the U.S. Securities and Exchange Commission (SEC) have come to a provisional agreement on June 16, under which Binance.US will be the only entity with access to customer funds.
Detailed Agreement Proposal
Pending approval from the overseeing federal judge, the proposed accord includes strict regulations that prevent Binance officials from gaining access to the private keys of wallets, hardware wallets, or root access to the Amazon Web Services tools of Binance.US. Furthermore, the U.S. cryptocurrency exchange platform is required to disclose thorough information about its business expenditures in the forthcoming weeks.
Motive Behind the Agreement
This interim accord has been initiated in response to a motion lodged by the SEC. The regulator had demanded a complete freeze of Binance.US’s assets amidst ongoing litigation. The SEC voiced concerns that, unless a temporary restraining order was imposed, there could be a possibility of funds moving offshore or essential documents being intentionally destroyed.
Opposition and Judicial Advice
However, this motion faced fierce opposition from Binance.US’s legal team. They argued that an outright freeze would be akin to imposing an overly harsh “death penalty” on the company. Amid these disagreements, U.S. district court judge Amy Berman Jackson suggested that it would be more beneficial for the parties to agree on a stipulation rather than depending on the court to issue a restraining order. She pointed out the limited duration of such orders – two weeks, which could prove insufficient considering the huge volume of exhibits submitted, amounting to more than 4,000 pages.
Additional Agreement Provisions
The agreement also incorporates extra provisions such as the creation of new crypto wallets by Binance.US, which will be off-limits to employees of other Binance entities. Additionally, Binance.US agrees to expedite the discovery schedule and supply more information to the SEC. Importantly, the agreement ensures that U.S.-based customers can withdraw funds during this period.
Broader Implications
Should the proposal be approved, it would partially alleviate the SEC’s apprehensions as the broader lawsuit progresses. The SEC has recently filed a lawsuit against Binance and Binance.US for alleged trading of unregistered securities and poor practices, including funds commingling. However, this agreement proposal does not cover the broader legal action.
