Binance.US and SEC Agree to Repatriate Customer Assets, Avoiding Total Asset Freeze

In a recent development, Binance.US and the US Securities and Exchange Commission (SEC) have reached an agreement that prevents a complete asset freeze at the cryptocurrency trading platform while the regulator’s lawsuit against it proceeds. The pact, announced on Saturday, mandates Binance Holdings, BAM Management US, BAM Trading Services, and founder Changpeng “CZ” Zhao to repatriate Binance.US customer assets. According to the order filed by US judge Amy Berman Jackson in Washington federal court, Binance.US is prohibited from utilizing corporate assets for any purpose other than covering the costs of running its business. Additionally, US customers are now allowed to redeem funds from the platform.

This decision by the judge concludes an agreement between the parties involved, safeguarding billions of dollars in customer funds without requiring the exchange to shut down. Initially, the SEC sought a complete asset freeze at Binance.US, the trading platform owned by Binance Holdings Ltd. co-founder, Zhao. Binance.US, which is vehemently contesting the SEC’s lawsuit and asserting the safety of customer assets, argued that halting the flow of all funds would severely impact its business and harm customers.

In response to the resolution, Binance.US expressed its satisfaction, stating that the dispute over the SEC’s freeze request had been resolved on mutually acceptable terms. However, a spokesperson for the company maintained that the SEC’s call for a freeze was “entirely unwarranted.”

The spokesperson emphasized the commitment to the security of user funds, stating, “User funds have been and always will be safe and secure on all Binance-affiliated platforms.”

The SEC’s lawsuit, filed on June 5, accused Binance and Zhao of mishandling customer funds, misleading investors and regulators, and violating securities regulations. The lawsuit also sought the repatriation of cryptocurrencies belonging to US customers, a request made when there is a concern that assets may be lost or concealed.

One of the allegations in the lawsuit revolves around the claim that Binance improperly transferred billions of dollars of customer funds to a bank account controlled by Zhao. These funds were then moved to a third party and appeared to be used for purchasing and selling cryptocurrencies, as detailed in the complaint.

In a memorandum, the SEC outlined that “Zhao and Binance have a pattern and practice of commingling customer funds” and mentioned their tendency to “move funds outside of the US and/or on the blockchain where they are outside of this court’s reach.”

The memorandum further disclosed that Binance.US customer assets amount to over $2.2 billion. It described Zhao as “a foreign national who has made overt his views that he is not subject to the jurisdiction of this court.”

This agreement between Binance.US and the SEC marks a significant milestone in their ongoing legal battle, allowing for the continued operation of the trading platform while addressing concerns about customer funds. The case will proceed as the SEC’s lawsuit against Binance and Zhao moves forward.