Court Denies SEC's Request to Freeze Binance.US Assets!!

US SEC and Binance reach unprecedented agreement to accelerate case and protect assets of US customers, as stated in court filings on June 16.

Judge Amy Jackson approves the agreement but denies SEC's request for a temporary restraining order (TRO) to freeze Binance.US assets. Earlier, she had urged both parties to negotiate an agreement to avoid a complete asset freeze.

The SEC sought an asset freeze due to concerns regarding fund commingling and the potential transfer of assets outside the United States.

Gurbir Grewal, Director of the SEC's Division of Enforcement, stated on June 17:

“In light of our allegations that Changpeng Zhao and Binance have control over customer assets on the platform and have the ability to commingle or divert those assets as they wish, these restrictions are crucial in safeguarding investor funds.”

Binance.US and CZ have strongly denied all allegations, accusing the SEC of employing aggressive tactics to stifle the crypto industry.

In response to the approved agreement, Binance.US issued a statement saying:

“The SEC has failed to present any evidence of customer asset misuse. In fact, during court proceedings this week, the SEC lawyers admitted, when questioned by the Judge, that they had no evidence to support such claims.”

Proposed Stipulation and Consent Order

The agreement, known as the “Proposed Stipulation and Consent Order,” permits Binance.US to continue its regular operations despite the ongoing litigation.

Furthermore, it severs the alleged link between Binance Holdings and Binance.US (officially BAM Trading in legal filings) and includes provisions for repatriating any U.S.-originating assets that may have been transferred abroad.

The agreement includes an emergency asset relief provision, as requested by the SEC, allowing Binance.US customers to access and withdraw their funds from the platform throughout the legal proceedings.

Grewal commented:

“We have ensured that U.S. customers can withdraw their assets from the platform while we address the alleged misconduct.”

Binance.US will be solely responsible for overseeing the funds and has been entrusted with preventing Binance Holdings officials from accessing its wallets, private keys, and Amazon Web Services tools.

Additionally, the agreement mandates that Binance.US transfers all customer funds to new wallets accessible only by its employees. Moreover, Binance.US may only use the necessary funds for essential day-to-day operations.

Expedited discovery

There has been widespread speculation within the crypto community that the SEC's legal actions against Coinbase and Binance could drag on for months or even years. As a result, many industry participants have been considering redirecting their growth efforts beyond the United States.

However, the consent order aims to expedite the proceedings in Binance's case by requiring all defendants to provide accelerated discovery and sworn testimony to the SEC. This will significantly reduce the time required to reach a resolution.

Furthermore, the consent order mandates that Binance.US provides a “verified written accounting” of all accounts and transfers made between December 31, 2022, and the date of the accounting.

Crypto or security？

Judge Jackson, who presides over the Binance-SEC case, will also issue initial rulings to determine whether specific cryptocurrencies are legally considered securities. This evaluation is part of the ongoing litigation.

The SEC has identified several tokens, such as Cardano, Solana, Polygon, and BNB, among others, as securities in their cases against both exchanges.

The preliminary rulings concerning these tokens are expected to have significant implications for the broader crypto industry in the United States.