Binance, the largest cryptocurrency exchange globally, has reached an agreement with the U.S. Securities and Exchange Commission (SEC) to safeguard the assets of its American customers within the country. The deal aims to address the regulatory agency’s comprehensive lawsuit, which was filed recently and remains pending resolution.
According to court documents filed late on Friday, the agreement, subject to the approval of the federal judge overseeing the case, restricts access to U.S. customer assets solely to Binance.US employees. This measure ensures that these assets do not end up being transferred offshore.
On June 5, the SEC initiated legal action against Binance, along with its CEO and founder, Changpeng Zhao, as well as the operator of Binance.US. The lawsuit alleges various misdeeds, including artificially inflating trading volumes, mishandling customer funds, failing to enforce restrictions on U.S. users, and providing misleading information regarding market surveillance controls.
These legal actions against Binance and the subsequent lawsuit against major U.S. exchange Coinbase, filed by the SEC the following day, signify an intensified crackdown by U.S. regulators on the cryptocurrency industry.
While the agreement between Binance.US and the SEC does not resolve the lawsuit, it stipulates measures to prevent Binance Holdings officials from accessing private keys associated with various wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. These details were outlined in the court filings.
In a statement released on Saturday, the SEC emphasized that the emergency relief order obtained for Binance.US customers serves to safeguard their assets and enable continued withdrawals.
Gurbir Grewal, director of the SEC’s enforcement division, highlighted the importance of these restrictions, stating, “Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please … these prohibitions are essential to protecting investor assets.”
Responding to the development, a Binance spokesperson expressed satisfaction with the resolution of the dispute surrounding the SEC’s request for emergency relief. While maintaining that the SEC’s request was unwarranted, they reassured users that funds on all Binance-affiliated platforms have always been and will continue to be secure.
Additionally, the proposed agreement outlines further provisions, including the creation of new crypto wallets by Binance.US, which will be inaccessible to employees of the global exchange. Binance.US will also provide additional information to the SEC and adhere to an expedited discovery schedule, as indicated in the court filings.
Last week, Binance’s U.S. affiliate suspended dollar deposits and set a deadline of June 13 for customers to withdraw their dollar funds after the SEC requested a freeze on its assets.