SEC gets Binance.US to agree to move client funds to US and restrict global employee access
If you have not been paying attention the action this week has been fast and furious between the SEC and Binance. There were three (3) major developments. Here’s what’s happening as of this writing:
Binance and Binance.US have reached an agreement with the United States Securities and Exchange Commission (SEC) to secure customer funds and private keys by repatriating all Binance.US users’ funds to the United States, thereby preventing Binance Holdings officials, including Chanpeng Zhao, from accessing them.
The development comes in response to the regulator’s request to freeze all of Binance.US’s assets as authorities continue to look into the lawsuit against the company.
Binance and SEC sign a mutual agreement
The United States web3 regulatory landscape has been quite challenging for market participants. The ongoing legal case between Binance, Binance.US, and the SEC is the latest in a series of enforcement actions against crypto businesses in the country.
The saga began when the SEC filed a lawsuit against Binance and Binance.US, accusing them of trading and offering unregistered securities to United States residents.
The lawsuit also raised concerns over the exchange’s commingling of funds and alleged poor practices. The SEC initially sought to freeze Binance.US’s assets through a temporary restraining order, fearing the possibility of asset movement offshore.
However, United States District Judge Amy Berman Jackson urged the parties to find a compromise rather than resorting to a restraining order, as treading such a path would hurt United States investors immensely.
The proposed agreement ensures that the exchange will continue its normal operations while its case with regulators continues.
Binance.US will implement measures to prevent Binance Holdings officials from accessing private keys, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. The agreement also requires Binance.US to share comprehensive information about its business expenses, including estimated costs, in the coming weeks.
Binance.US will also create new crypto wallets that will be inaccessible to employees of the global exchange. The exchange has also been mandated to provide more information to the SEC and adhere to an expedited discovery schedule. United States-based customers will be able to withdraw funds during this period.
SEC chair criticized
Meanwhile, Chair Gary Gensler has faced criticism from lawmakers and web3 proponents in recent weeks, with members of Congress recently floating a bill to remove him from his position as SEC Chair.
The bill’s creators, House Majority Whip Tom Emmer and Rep. Warren Davidson, have argued that Gensler’s leadership has been characterized by a “long series of abuses.”
Amid the regulatory battles, Coinbase, the largest crypto exchange in the United States, filed a petition against the SEC in April, seeking more regulatory clarity for the industry. However, the SEC has yet to respond to Coinbase’s request, leaving the industry uncertain.
As the crypto industry navigates these challenging regulations in the United States, the outcome of the Binance-SEC case and the fate of Chair Gary Gensler remain critical points of interest.
