Binance’s U.S. arm and the Securities and Exchange Commission (SEC) are working on an agreement that would avoid a complete assets freeze on the cryptocurrency platform, which the regulator accuses of illegal activities.
U.S. Federal Judge Amy Berman Jackson ruled to refer the SEC’s motion to freeze the U.S. assets of Binance to a justice of the peace so that the parties can reach a compromise. This is reported by Bloomberg.
On June 6, the regulator accused Binance of violating U.S. securities laws and filed an urgent appeal for a temporary ban on Binance.US.
In response to the charges, Binance’s American arm, BAM Trading, tried to mitigate the SEC’s demands, claiming that the blocking of assets is necessary because of the risk that Binance will transfer customer funds overseas.
Binance.US’s attorneys filed a counterclaim, calling the SEC’s motion unduly burdensome, particularly highlighting the fact that the SEC didn’t provide enough evidence to prove Binance’s wrongdoing. Speaking to the judge, Binance’s attorney said that the exchange needs a way to cover operating expenses such as rent, salaries, software licensing, and others. He also added that a complete blocking of assets could be misinterpreted by banks.
Judge Jackson agreed with the defense attorney’s arguments, noting that a complete shutdown of the crypto exchange would have serious consequences not only for the company, but for the digital asset market. Therefore, the judge expects the plaintiff and defendant to reach an agreement.
The main conditions for reaching a compromise between Binance and the SEC are to comply with two important points:
- Binance will move U.S. customers’ crypto-assets to new wallets with new private keys under the full control of Binance.US employees and restrict access to funds to any companies led by Changpeng Zhao.
- The SEC will allow Binance.US to continue paying salaries and operating expenses, provided that no assets are transferred to any Binance entity without a court order.
Judge Jackson noted that the parties were fairly close to reaching an agreement. A decision on the temporary ban will be made after negotiations with the magistrate judge, which are due to conclude on June 15.
It has also been revealed that Binance.US is expanding its legal team to defend against the charges. The company hired four experienced criminal and bankruptcy attorneys from Milbank LLP, including George Canellos, ex-Chief of the major crimes unit at the U.S. Attorney’s Office in the Southern District of New York and ex-SEC Enforcement Director. According to John Reed Stark, another ex-SEC official, Binance is clearly preparing for criminal prosecution by hiring such high-profile lawyers. However, in his opinion, nothing and no one can save the cryptocurrency exchange from a legal quagmire that will drag the company deeper and deeper.
The SEC filed a lawsuit against the crypto exchange Coinbase, accusing it of operating as a securities exchange, broker, and clearing agency without proper registration.
