Binance, Binance.US, and the Securities and Exchange Commission (SEC) have reached a significant agreement aimed at safeguarding the funds of U.S. customers. The deal, which is subject to approval from the federal judge overseeing the case, entails moving all customer funds and wallet keys back onshore under the control of Binance.US employees.
Safeguarding Wallet Keys and Access
According to the agreement, Binance.US will implement measures to ensure that officials from Binance Holdings, the global exchange, do not have access to the private keys of various wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. This move aims to enhance the security and control of customer funds.
Transparency in Business Expenses
As part of the deal, the U.S.-based cryptocurrency trading platform, Binance.US, will disclose detailed information about its business expenses, including estimated costs. This transparency is intended to address the SEC’s concerns and foster trust in the handling of customer funds.
Responding to the SEC’s Motion
The proposed agreement is a response to the SEC’s motion to freeze all of Binance.US’s assets while pursuing securities-related charges against the exchange. The SEC expressed concerns about potential fund transfers offshore and the possibility of records being destroyed. Granting a temporary restraining order (TRO) would prevent these risks.
Judge’s Recommendation for Agreement
Judge Amy Berman Jackson of the District Court for the District of Columbia advised the parties involved to reach a proposed stipulation rather than relying on her to issue a restraining order. She emphasized that a TRO allows for a limited two-week period before a more in-depth hearing, which may be insufficient given the extensive exhibits already filed.
Additional Provisions in the Proposed Agreement
Apart from the key aspects, the proposed agreement entails Binance.US creating new crypto wallets that are inaccessible to employees of the global exchange. The agreement also includes providing additional information to the SEC and agreeing to an expedited discovery schedule. During the implementation of the agreement, U.S.-based customers will still retain the ability to withdraw their funds, ensuring ongoing access to their assets.
Addressing SEC’s Concerns and Lawsuit Progression
If accepted, the proposed agreement will address some of the SEC’s stated concerns as the broader lawsuit against Binance and Binance.US progresses through the judicial system. The SEC’s lawsuit alleges the offering and trading of unregistered securities, as well as commingling of funds and poor practices. However, the proposed agreement does not directly delve into the details of the broader suit.
Overall, the agreement signifies a collaborative effort between Binance, Binance.US, and the SEC to protect the interests of U.S. customers and ensure the proper management of customer funds. As the legal proceedings continue, the proposed measures aim to mitigate risks and promote transparency within the cryptocurrency industry.