- Binance.US and the U.S. SEC recently reached an agreement on how to secure customer deposits.
- The agreement received court approval over the weekend.
- Experts have expressed contrary views on who the agreement favors.
As part of a sweeping enforcement action against Binance, the world’s largest crypto exchange, the United States Securities and Exchange Commission moved to freeze assets belonging to its U.S. affiliate Binance.US.
The SEC alleged that Binance was in the habit of commingling and mishandling customer funds, raising concerns about the safety of U.S. customer deposits.
In a June 13 hearing, Judge Amy Berman Jackson urged both parties to reach a compromise, agreeing with Binance.US lawyers that a full asset freeze could force the business to shut down. Over the weekend, the judge approved the compromise reached by both parties, but experts are divided on whether the outcome is in Binance’s favor.
Cause for Celebration or Concern?
"The consent order is very close to what Binance offered to the SEC at the outset. The important thing is--this is a consent decree and not a Temporary Restraining Order," he added.
According to Murphy, this distinction is important as it implies that the judge has yet to conclude that the SEC had provided enough evidence to prove a likelihood of success on the case’s merits.
But not all legal experts are as optimistic as Murphy.
“Very tough to argue that what is just short of an SEC/Judicial receivership is some sort of Binance victory,” Former SEC Office of Internet Enforcement Chief John Reed Stark asserted in a tweet on Sunday, June 18.
The former SEC staff highlighted that the order gave regulators significant oversight, which he argued could lead to fresh charges against Binance.
Aside from requiring Binance.US to maintain full control of customer deposits, the consent order also gives the SEC oversight over the firm’s spending, which is now restricted to only operational expenses.
"Although we maintain that the SEC's request for emergency relief was entirely unwarranted, we are pleased that the disagreement over this request was resolved on mutually acceptable terms. User funds have been and always will be safe and secure on all Binance-affiliated platforms," he contended.
Binance.US issued a similar statement arguing that the SEC has failed to provide evidence to support its claims that the crypto exchange had misused customer deposits.
On the Flipside
- Binance.US has reportedly been forced to lay off about 10% of its staff due to the SEC lawsuit.
- Binance is also facing a lawsuit from the U.S. Commodity Futures Trading Commission.
Why This Matters
The recent agreement in the case should theoretically allow Binance.US to remain operational while the lawsuit continues. Still, the SEC’s new oversight over its activities may lead to unforeseen outcomes in the case.
Read this rundown to learn about what transpired in last week’s hearing over the SEC’s proposed asset freeze:
Binance.US is feeling the strain in the face of the SEC lawsuit. Find out more: