Judge Jackson Approves Binance

Judge Jackson Approves Binance – SEC Settlement

Updated: 18 June 2023

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Judge Amy Berman Jackson, the judge overseeing the case between the Securities and Exchange Commission (SEC) and Binance, has approved the Binance – SEC settlement, rejecting SEC’s request to freeze assets. The news comes after the SEC and Binance agreed on a compromise that would allow the exchange to remain open as it battles a fraud lawsuit.

BREAKING 🚨 #BINANCE

Judge Jackson Approves Binance-SEC Settlement, Rejects SEC’s Request to Freeze Assets. pic.twitter.com/9wJVHdyTCn

— Algo trading (@mastergroove101) June 17, 2023

The proposed agreement, however, would ensure that only Binance.US employees can access customer funds until the ongoing litigation is resolved.

Binance to Repatriate Certain Assets

From the Consent Order, Binance.US will ensure that no Binance Holdings official can access private keys, root access, or hardware wallets for Binance.US Amazon Web Services tools.

The ruling states, “On or before the date the Court issues this Consent Order, the Stipulating Defendants shall repatriate to the United States, transfer to BAM Trading, and confirm that BAM Trading maintains possession, custody, and control in the United States of all fiat currency and crypto assets that were deposited, held, traded, or accrued by customers….”

Additionally, BAM Trading and BAM management must agree not to provide possession, custody, or control over customer assets to any other body, including Binance or Changpeng Zhao. The Judge also reiterates that Biance.US must provide a verified written accounting of accounts connected to BAM entities. All assets, funds, crypto, securities, or other properties valued higher than $1,000 transferred to or for the benefit of the defendant or any Binance entity as of December 1, 2022, must be shared as information with the SEC.

Lastly, Binance.US must agree to provide a monthly report of BAM Ordinary Course Business Expenses with the amount spent, with a breakdown of every category and subcategory. This includes any amount that exceeds $150,000 to foreign employees or entities.

Federal Court Shys Away From Freezing Funds

In their court filing, the SEC was determined for an asset freeze, indicating that it was necessary to ensure that Binance did not endanger user funds or seek to move money abroad. The SEC had filed an emergency motion for a temporary restraining order on Binance.US on June 6 after accusing Binance CEO Changpeng Zhao of having access to Binance.US customer funds in a lawsuit. The regulator alleged Zhao moved $12 billion of Binance’s funds through an entity he controlled called Merit Peak.

Ahead of the hearing on the restraining order, Binance.US and Zhao submitted a joint memo stating that the funds were never mishandled. Based on their stance, the SEC has failed to identify instances where Binance.US customer funds have been misused.

Although we maintain that the SEC’s request for emergency relief was entirely unwarranted, we are pleased that the disagreement over this request was resolved on mutually acceptable terms.

User funds have been and always will be safe and secure on all Binance-affiliated…

— CZ 🔶 Binance (@cz_binance) June 17, 2023

However, according to Judge Jackson, if the two sides could agree on limits, there would be no need for a restraining order. In the meantime, with the new order, the Judge ordered Binance.US to provide a list of its business expenses to the court and ordered the parties to continue negotiating.

Judge Amy Jackson, however, signed an order preventing the defendants from spending corporate assets other than for ordinary business expenses. The court order would allow the SEC to oversee any spending and prohibit the defendants from destroying records.