Court wants Binance.US, SEC to avoid full asset freeze

A federal judge set a Jun. 15 deadline for the SEC and Binance.US to resolve the matter, a bid to avoid damaging crypto markets

article-image

Binance CEO Changpeng Zhao | Web Summit/"Changpeng Zhao" (CC license)

share

Binance.US and the Securities & Exchange Commission (SEC) are racing against a deadline to strike a deal that could prevent a full asset freeze for the exchange.

The commission initiated legal action against Binance and affiliated entities on earlier this month. Following that, the SEC requested a temporary restraining order and asset freeze.

US District Judge Amy German Jackson on Tuesday encouraged the SEC to find middle ground with Binance.US. Doing so could pave the way for Binance to maintain its operations within the US.

Jackson gave the parties until Jun. 15, 5pm ET to figure things out and chose a magistrate judge Zia Faruqui to help negotiations, according to an order filed Tuesday.

Binance.US also needs to submit a list of regular expenses by June 14 at 9am ET. Binance.US suspended US dollar deposits last week and warned users that withdrawals could be suspended as early as Tuesday, in preparation for the court session.

The SEC also suggested a new deal on Tuesday that would relax certain limitations which previously demanded a total freeze of assets. 

The proposed agreement provides some guarantees to Binance affiliate BAM Trading (which runs Binance US), allowing the firm to maintain control over its US assets for paying salaries and fulfilling other financial obligations.

BAM Trading would also be able to assist customers in redeeming their crypto assets without any restrictions.

“BAM Trading and BAM Management may continue to make payments for the purchase of goods and services, salaries for BAM Trading and BAM Management personnel, including preexisting benefits, professional fees, and other similar ordinary-course expenditures for the operation of their businesses,” the order states.

SEC demands user crypto be sent back to Binance.US

The proposed order stipulates that Binance CEO Changpeng Zhao would have no access to the US exchange’s assets or wallets.

The SEC further requested that Binance bring back customer assets to the US, where entities independent of Zhao would have control and could handle customer redemptions. 

In its lawsuit, which cites 13 separate counts, the SEC claimed that Sigma Chain and Merit Peak, two foreign entities controlled by Zhao, were used as a means to commingle billions in customer funds with Binance’s own. 

These companies are believed to have operated as Binance market makers or intermediaries meant to provide liquidity for the exchange.

Blockworks has reached out to Binance for comment. Binance earlier stated that freezing its assets would essentially stop its business in the US and prevent any transfer of funds, including redemptions.

And the judge reportedly agreed, saying during the hearing that completely shutting it down would have significant consequences not just for the company, but for the wider crypto market too.

The SEC’s proposal is still awaiting approval, and more updates are anticipated on Thursday.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Blinks Report Image.png

Research

Blinks enable the ability to vampire attack user monetization of existing networks by inserting onchain and financialized functionalities directly within the popular social feeds and digital experiences of today.

article-image

Plus, how the FTX collapse played out in Asian countries

article-image

Kalshi founder Tarek Mansour said Thursday marked the “the first trade on regulated election markets in nearly a century”

article-image

I was excited about being on the precipice of realigning societal incentives and solving many issues plaguing our modern financial world

article-image

Cypherpunk Holdings has rebranded to Sol Strategies in a pivot to a Solana-first investment approach

article-image

BitGo’s wrapped bitcoin (wBTC) has a new custodial challenger

article-image

Make no mistake: Tether makes a ton of money. But exactly how much depends a lot on the price of bitcoin.