In a recent development, Binance, the cryptocurrency exchange, and the Securities and Exchange Commission (SEC) have reached a mutually agreeable settlement that allows Binance to continue its operations in the US until the resolution of the SEC’s lawsuit, filed earlier this month. The lawsuit accused Binance, as well as its founder Changpeng Zhao (known as CZ), of various violations, including artificially inflating trading volumes, mishandling customer assets, and failing to restrict US investors from trading on Binance.com.
Initially, the SEC sought to freeze Binance’s assets in the US, citing the need to protect customer funds and prevent potential movement of money overseas. However, Binance argued that such an asset freeze would force them out of business in the US. To address this issue, the judge overseeing the litigation ordered both parties to find a compromise that safeguards customer assets.
As per a court filing obtained by The New York Times, the SEC disclosed on Friday that Binance agreed to transfer all assets belonging to US customers within the country. Furthermore, Binance’s US operation is prohibited from granting access or control of domestic assets or funds to its international operation or CZ. During the resolution of the lawsuit, Binance.US is only permitted to transfer assets for necessary business expenses or to fulfill incurred obligations. Additionally, the exchange is required to establish new customer wallets that cannot be accessed by its international employees. It is important to note that this agreement, if approved by Judge Amy Berman, does not resolve the SEC lawsuit.
The SEC emphasized the significance of these prohibitions in protecting investor assets, stating that they are crucial considering the allegations against CZ and Binance of misusing and diverting customer assets. The SEC also ensured that US customers will retain the ability to withdraw their assets from the platform while the underlying misconduct allegations are being addressed, holding CZ and Binance accountable for any alleged violations of securities laws.
Changpeng Zhao took to Twitter to express his thoughts on the agreement, stating that while they believe the SEC’s request for emergency relief was unjustified, they are satisfied with the resolution on mutually acceptable terms. Zhao reassured users that their funds have always been and will continue to be safe and secure on all Binance-affiliated platforms.
The SEC’s lawsuit against Binance is part of its broader campaign targeting the cryptocurrency industry. Prior to suing Binance, the SEC filed a complaint against FTX founder Sam Bankman-Fried, accusing him of orchestrating a multi-year scheme to defraud investors. Additionally, the SEC lodged a complaint against Coinbase, the largest crypto trading platform in the US, alleging the company’s failure to register as a broker, national securities exchange, or clearing agency.
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Frequently Asked Questions (FAQs) about cryptocurrency exchange
What is the recent agreement between Binance and the SEC?
Binance and the Securities and Exchange Commission (SEC) have reached an agreement that allows Binance to continue operating in the US until the resolution of the SEC’s lawsuit. The agreement includes measures to safeguard customer assets and restrict certain operations.
What were the allegations against Binance by the SEC?
The SEC accused Binance of artificially inflating trading volumes, mishandling customer assets, and failing to enforce restrictions on US investors trading on Binance.com. The allegations were part of the lawsuit filed by the SEC against Binance and its founder, Changpeng Zhao.
What was the SEC’s initial plan regarding Binance’s US assets?
The SEC initially sought to freeze Binance’s US assets to protect customer funds and prevent potential movement of money abroad.
What compromise was reached regarding customer assets?
As part of the agreement, Binance agreed to move all assets belonging to US customers within the United States. The company’s US operation is prohibited from providing access or control of domestic assets or funds to Binance’s international operation or Changpeng Zhao.
What restrictions are placed on Binance’s US operation?
Until the lawsuit is resolved, Binance.US is only allowed to transfer assets for necessary business expenses or obligations incurred in the ordinary course of business. Additionally, the exchange is required to create new customer wallets that cannot be accessed by its international employees.
Does the agreement resolve the SEC lawsuit?
No, the agreement between Binance and the SEC does not resolve the SEC lawsuit. It still needs approval from the judge overseeing the litigation.
How does Binance CEO, Changpeng Zhao, respond to the agreement?
Changpeng Zhao, known as CZ, expressed his satisfaction with the resolution on mutually acceptable terms, stating that user funds have always been and will continue to be safe and secure on all Binance-affiliated platforms.
Is the SEC’s lawsuit part of a broader crackdown on the crypto industry?
Yes, the SEC’s lawsuit against Binance is part of a broader campaign by the watchdog targeting the cryptocurrency industry. The SEC has also filed complaints against other entities in the industry, such as FTX and Coinbase, alleging various violations and regulatory non-compliance.
More about cryptocurrency exchange
- SEC Official Website – Official website of the Securities and Exchange Commission (SEC).
- Binance Official Website – Official website of Binance, the cryptocurrency exchange.
- Article on the Lawsuit – The New York Times article providing details on the lawsuit between the SEC and Binance.
- Changpeng Zhao’s Twitter – Changpeng Zhao’s official Twitter account for updates and statements regarding Binance and the agreement.
- FTX Official Website – Official website of FTX, another cryptocurrency exchange targeted by the SEC.
- Coinbase Official Website – Official website of Coinbase, the largest cryptocurrency trading platform in the US mentioned in the text.