Binance to lose access to Binance.US's cryptocurrency under proposed SEC deal
Quick Take
- Binance.US proposed an agreement with the SEC to restrict customer fund access to its employees only.
- This was in response to a motion to freeze its assets over alleged securities law violations.
Binance.US, the U.S. offshoot of cryptocurrency exchange Binance, and the Securities and Exchange Commission (SEC) have agreed on a plan that would restrict access of customer funds from Binance.
The proposed deal, first reported by CoinDesk, is pending approval from a federal judge.
According to the proposed agreement, Binance.US will prevent any Binance Holdings officials from accessing private keys tied to client wallets as well as Binance.US’s cloud infrastructure. In the next few weeks, Binance.US expects to share information pertaining to the costs of these efforts.
The proposed agreement comes in response to the SEC’s motion to freeze all of Binance.US’s assets following its lawsuit against the exchange, which alleges the exchanges were improperly connected and violated securities laws. The SEC expressed concerns that Binance.US funds could be moved offshore and requested a temporary restraining order. For its part, Binance.US’s lawyers argued that freezing its assets would be too harsh, comparing it to a “death penalty.”
U.S. District Judge Amy Berman Jackson recommended the two parties reach an agreement rather than imposing a temporary restraining order given the complexity of the case and the two-week limit for further hearings.
The proposed agreement will require Binance.US to create new wallets that are inaccessible to Binance’s global employees, provide additional information to the SEC, and agree to an expedited discovery schedule. During this time, U.S. customers will still be allowed to withdraw funds.
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