Cryptocurrency trading platform Binance.US has reached an agreement with the US Securities and Exchange Commission that will spare it from having its entire assets frozen while the regulator's lawsuit against it is pending.
Under the agreement announced today, Saturday; Binance Holdings, BAM Management US, BAM Trading Services and founder Changpeng Zhao will return the assets of Binance US clients to the United States.
BinanceUS is barred from spending the company's assets except to cover the costs of running its business while allowing US clients to reclaim them from the platform, according to the order filed by US District Judge Amy Berman Jackson in Washington federal court.
Protect funds without closing the stock exchange
The judge's decision finalized an agreement struck between the two parties to protect billions of dollars of client funds without shutting down the exchange. The SEC originally sought to freeze the total assets of Binance US, the trading platform owned by Binance Holdings co-founder Zhao.
Binance US, which is fighting the commission's lawsuit, says clients' assets are safe, and freezing its assets would cripple its business and harm clients.
US lawsuit against Binance over allegations of violating trading rules
On Saturday, Binance US expressed pleasure that the dispute over the SEC's request had been resolved on mutually acceptable terms, but a spokesperson emphasized that the call for a freeze was completely unjustified.
The spokesperson added: Users' funds were and always will be safe and secure on all platforms affiliated with (Binance).
In the lawsuit filed on June 5; The Securities and Exchange Commission charged Binance and Chao with mismanaging client funds, misleading investors and regulators, and breaching securities rules. It also requested the repatriation of US customers' cryptocurrencies; It is a request that is only made when there is a risk of loss or concealment of assets.
Consolidation of customer funds
Among the allegations in the lawsuit, the SEC alleges that Binance wrongfully transferred billions of dollars of customer funds to a bank account of an entity controlled by Zhao. The lawsuit says that this money was transferred to a third party and then apparently used to buy and sell cryptocurrencies.
The SEC said in a memo that Zhao and Binance pursue a method of consolidating customer funds, as well as moving funds outside the United States and/or on the blockchain, where they are outside the jurisdiction of this court.
The memo stated that Binance US customers had more than $2.2 billion in assets, and described Zhao as a foreign national who had expressed his views publicly because he is not subject to the jurisdiction of this court.
