Binance, Binance.US, and the Securities and Exchange Commission (SEC) reportedly revealed an agreement, late Friday, June 16, temporarily limiting access to customer funds exclusively to Binance.US employees.
According to reports, the proposed agreement, pending approval from the overseeing federal judge, outlines measures for Binance.US to prevent any access by Binance Holdings officials to private keys of wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. Additionally, the U.S.-based crypto trading platform will disclose comprehensive information on business expenses, including estimated costs, in the upcoming weeks.
The proposed agreement has emerged as a direct response to a motion filed by the SEC aiming to freeze the entirety of Binance.US’s assets during the ongoing legal proceedings related to securities-related charges. The regulatory body expressed apprehension that without a granted TRO, there might be a risk of funds being transferred offshore or crucial records being deliberately destroyed.
However, Binance.US’s legal representatives strongly opposed this notion, contending that imposing a complete freeze on all assets would essentially be equivalent to administering an excessively severe “death penalty” upon the company.
During a hearing earlier this week, Judge Amy Berman Jackson, presiding over the District Court for the District of Columbia, advised the involved parties that it would be more advantageous for them to reach an agreement on a proposed stipulation rather than relying on her to formulate a restraining order. The judge emphasized that a temporary restraining order carries a limited duration of two weeks, which might prove inadequate for a comprehensive and thorough hearing. This is particularly true considering the substantial volume of exhibits already submitted, amounting to over 4,000 pages.
The proposed agreement includes additional provisions such as the creation of new crypto wallets by Binance.US, which will be inaccessible to employees of the global exchange. Furthermore, Binance.US commits to providing additional information to the SEC and agreeing to an accelerated discovery schedule. Notably, customers based in the United States will retain the ability to withdraw funds throughout this period.
If accepted, the proposed agreement will partially address the SEC’s concerns while the broader lawsuit progresses. The SEC recently sued Binance and Binance.US for trading unregistered securities and alleged commingling of funds and poor practices. However, the proposed agreement does not encompass the broader lawsuit.