In a recent turn of events late on Friday, Binance, Binance.US, and the Securities and Exchange Commission (SEC) have proposed an agreement with significant implications for the crypto trading industry. This announcement aims to assure the public that only employees of Binance.US will have access to customer funds on a short-term basis.
The Impending Binance.US Deal and Its Stipulations
As it stands, the agreement is still awaiting approval from the overseeing federal judge. If given the green light, Binance.US is expected to implement stringent measures that prevent Binance Holdings officials from accessing any private keys associated with its wallets, hardware wallets, or root access to the Binance.US Amazon Web Services tools. Moreover, in the following weeks, the US-based crypto trading platform will disclose in-depth details about its business expenditures, including projected costs.
This agreement proposal is a strategic response to the SEC’s previous request to freeze Binance.US’s assets as they press on with securities-related allegations against the exchange. The regulator cited fears of potential offshore funds transfer or the obliteration of records, necessitating a temporary restraining order (TRO). However, Binance.US’s lawyers quickly challenged this, expressing concerns that freezing all assets would equate to an economic “death penalty.”
Court’s Recommendation and Reaction
The presiding Judge, Amy Berman Jackson of the District Court for the District of Columbia, advocated for an agreed-upon proposal rather than issuing a restraining order. She highlighted that a TRO, with its inherent two-week limit for more exhaustive hearings, might not provide enough time to prepare given the extensive nature of the exhibits – over 4,000 pages – already submitted by the parties.
The proposed deal further suggests additional regulations for Binance.US, including creating new crypto wallets inaccessible to the global exchange’s staff, providing supplementary information to the SEC, and compliance with an accelerated discovery schedule. Importantly, U.S.-based customers will still maintain their right to withdraw funds during this period.
The SEC’s concerns will be partially addressed if the agreement gets the judicial nod. This could be a vital turning point as the larger lawsuit filed by the SEC against Binance and Binance.US for allegedly trading and offering unregistered securities continues progressing through the legal channels. In addition to these charges, the SEC also claims rampant commingling of funds and poor financial practices. However, the proposed agreement does not delve into these broader issues.
While this proposed agreement represents a significant shift in the relationship between crypto trading platforms and regulatory bodies, the broader implications for Binance.US and the wider crypto industry remain to be seen.
The coming weeks will prove pivotal in shaping the future of this fast-paced, dynamic sector.