It’s a breather for Binance.US as the federal judge had rejected the SEC’s demand of freezing the exchange’s funds and other assets on the Binance.US trading platform. The development comes a day after Binance made a similar request with the court to disapprove SEC’s proposal.
On Tuesday, June 13, US District Judge Amy Berman Jackson said that both – Binance.US and the Securities and Exchange Commission – have agreed to work on a deal of avoiding a total asset freeze. Jackson said that the two sides “aren’t that far apart” on ways of protecting billions of dollars in customers’ funds without the need of shutting down the exchange as the lawsuit proceeds.
During a hearing yesterday, Jackson said: “the nitty-gritty of it is better handled by you than by me”. The judge added that if the two parties reach a deal mutually, she would no longer have to rule on the SEC’s request of introducing a temporary restraining order.
Binance.US Opposes to Giving Up Control Over Funds
Soon after filing the lawsuit on Binance.US for violating federal securities laws, the SEC sought an order to freeze the funds at Binance.US. The federal securities regulator argued that the restraint order would prevent the dissipation of funds.
However, Binance.US strongly opposed the SEC’s call stating that blocking the flow of funds would cripple its business and ultimately hurt its customers. “We are not willing to accept the death penalty eight days into our case,” ae Binance.US lawyers told the judge.
Binance further argued that the exchange needs to have enough funds at hand to cover ordinary business expenses such as payments for salaries, rents, vendors, and licensing of software. The binance.US attorney noted: “The area that is giving us consternation is an asset freeze that will be misconstrued by banks”.
Binance.US and SEC Reach A Compromise
Binance suggested a plan that involved moving US customers’ cryptocurrency to new wallets with new private keys. These wallets would be controlled only by officers based in the US at Binance.US.
As part of its plan, the exchange requested permission to continue paying its employees and covering its expenses. However, it assured that no assets would be transferred or payments made to benefit any Binance entity without a judge’s approval.
In response, the SEC proposed that Binance bring back customer assets to the US. This way, the assets would be under the control of entities that are not controlled by Zhao and can handle customer withdrawals.
During the hearing, an SEC lawyer mentioned that the regulator is open to a specific exception that would allow Binance.US to continue its operations while the freeze is in effect. The SEC also requested that Binance.US provide details of its expenses and fees to better understand the financial requirements for maintaining the platform.
The judge has asked Binance.US to file business expenses by Wednesday.
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