Binance, the world’s largest cryptocurrency exchange, and its US affiliate Binance.US have entered into an agreement with the US Securities and Exchange Commission (SEC) to safeguard customer assets within the United States until the resolution of an ongoing lawsuit filed by the regulatory agency.
The agreement, disclosed in court documents filed on Friday, awaits the approval of a federal judge overseeing the litigation. Its primary objective is to prevent US customer assets from being moved offshore, with exclusive access granted solely to Binance.US employees. This measure seeks to address the SEC’s concerns related to the alleged artificial inflation of trading volumes, diversion of customer funds, failure to restrict US customers, and misleading investors about market surveillance controls.
Although the agreement does not settle the SEC lawsuit, it includes provisions aimed at ensuring the security of customer assets. Binance.US will undertake specific measures to restrict Binance Holdings officials from accessing private keys for wallets, hardware wallets, and root access to Binance.US’s Amazon Web Services tools, according to court filings. The SEC emphasised that the emergency relief order obtained for Binance.US customers will protect their assets and enable them to continue withdrawing those assets.
Gurbir Grewal, director of the SEC’s enforcement division, stated, “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.” The legal action taken against Binance and a separate lawsuit against Coinbase signify an escalated crackdown by US regulators on the cryptocurrency industry.
In response to the developments, a Binance spokesperson released a statement on Saturday, stating, “Although we maintain that the SEC’s request for emergency relief was entirely unwarranted, we are pleased that the disagreement over this request was resolved on mutually acceptable terms. User funds have been and always will be safe and secure on all Binance-affiliated platforms.”
Additional provisions outlined in the proposed agreement include Binance.US creating new crypto wallets inaccessible to employees of the global exchange, providing further information to the SEC, and agreeing to an expedited discovery schedule, as stated in the court filings.
Last week, Binance.US temporarily suspended dollar deposits and set a deadline of June 13 for customers to withdraw their dollar funds, following the SEC’s request to freeze the exchange’s assets.