Binance, Binance.US, and the United States Securities and Exchange Commission (SEC) reportedly agreed on Friday, June 16, to temporarily limit access to customer funds exclusively to Binance.US employees.
According to reports, the proposed agreement, pending approval from the overseeing federal judge, outlines measures for Binance.US to prevent any access by Binance officials to private keys of wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. Additionally, the U.S.-based crypto trading platform will disclose comprehensive information on business expenses, including estimated costs, in the upcoming weeks.
The agreement has emerged as a direct response to a motion filed by the SEC seeking to freeze the entirety of Binance.US’s assets during ongoing legal proceedings. The regulatory body expressed apprehension that without a granted temporary restraining order, there might be a risk of funds being transferred offshore or crucial records being deliberately destroyed.
However, Binance.US’s legal representatives strongly opposed the notion, contending that imposing a complete freeze on all assets would essentially be equivalent to administering an excessively severe “death penalty” upon the company.
During a hearing earlier in the week, U.S. district court judge Amy Berman Jackson advised the involved parties that it would be more advantageous to reach an agreement on a proposed stipulation rather than relying on the court to formulate a restraining order. The judge emphasized that a temporary restraining order carries a limited duration of two weeks, which might prove inadequate for a comprehensive hearing. This is particularly true considering the substantial volume of submitted exhibits, amounting to over 4,000 pages.
The proposed agreement includes additional provisions, such as the creation of new crypto wallets by Binance.US, which will be inaccessible to employees of other Binance entities. Furthermore, Binance.US commits to providing additional information to the SEC and agrees to an accelerated discovery schedule. Notably, U.S.-based customers will retain the ability to withdraw funds throughout this period.
If accepted, the proposed agreement will partially address the SEC’s concerns while the broader lawsuit progresses. The SEC recently sued Binance and Binance.US for trading unregistered securities, and alleged commingling of funds and poor practices. However, the proposed agreement does not encompass the broader lawsuit.