Chief Ed

Binance agrees to keep US customer assets in the country amid SEC lawsuit

Crypto

Binance, the world’s largest cryptocurrency exchange, has reached a deal with the US Securities and Exchange Commission (SEC) that will allow it to continue operating in the US while facing a fraud lawsuit. The SEC accused Binance and its founder Changpeng Zhao of violating securities laws, operating unregistered exchanges and broker-dealers, misusing investor funds, and engaging in market manipulation.

The SEC filed the charges on June 5 and sought to freeze Binance’s US assets, which the exchange’s lawyers said would put it out of business in the US. However, after several days of mediation, the two sides agreed on a compromise that was approved by a federal judge on June 17.

According to the deal, Binance will separate the funds of its US customers from its global operations and put them in special digital wallets that are only accessible to its US affiliate, Binance.US. Binance.US can only use these funds to pay for expenses or obligations incurred in the normal course of business. The deal also stipulates that Binance and Zhao will not transfer any assets out of the US or commingle them with other entities they control.

The agreement is meant to protect the interests of US customers while the SEC pursues its case against Binance and Zhao. The SEC alleges that Binance and Zhao deceived investors and regulators about their trading controls and oversight, secretly allowed high-value US customers to trade on their offshore platform, Binance.com, and diverted customer assets to a third party owned by Zhao, called Sigma Chain.

Binance and Zhao have denied the allegations and said they will fight them in court. They also said they are pleased that the disagreement over the asset freeze was resolved on mutually acceptable terms. The SEC said it ensured that US customers will be able to withdraw their assets from the platform while it works to resolve the alleged underlying misconduct.

The lawsuit is part of a broader crackdown by the SEC on the crypto industry, which has grown rapidly in recent years but faces uncertain regulation in the US. The SEC has also sued Coinbase, Binance’s main rival in the US, for allegedly offering unregistered securities through its lending program. Some crypto companies have responded by moving their operations to countries with more favorable regulations, while others have vowed to challenge the SEC in court.

Leave a Comment