Binance.US Strives to Prevent Asset Freeze Through Negotiations with SEC

Sahana Kiran
Source – Unsplash

The crypto industry has been hit with a sudden wave of regulatory overhaul. Binance and Coinbase are at the receiving end of the Securities and Exchange Commission’s hostility. On June 6, the SEC filed an urgent request for a temporary restraining order against Binance.US. The regulator alleged that Binance CEO, Changpeng Zhao could access customer funds held by Binance.US.

Amidst the ongoing legal proceedings, U.S. District Judge Amy Berman Jackson took into consideration the interests of the market and investors and made a decision. Judge Jackson dismissed the temporary restraining order that would have frozen the assets of Binance.US. This further allows the company’s U.S. arm to resume its operations. Alongside this, it has to engage in discussions with the SEC to set any necessary restrictions.

The Judge stressed the importance of collaboration between Binance.US and the SEC. She urged them to engage with a magistrate judge to find a mutually agreeable resolution. The goal of this collaborative effort is to ensure the safeguarding of customer funds while evading a complete shutdown of the exchange. The Judge added,

“Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general.”

The outcome of the negotiations between the two entities with the magistrate is anticipated to be disclosed by June 15. Judge Jackson further clarified that she would not reach a final decision on the SEC’s motion for a temporary restraining order. At least, until both parties had resolved the matter with the magistrate.

Binance.US says no to the “death penalty”

Jennifer Farer, an SEC lawyer, highlighted during the hearing on June 13 that the SEC was open to Binance.US being able to “continue to operate.” On the other hand, lawyers representing Binance.US emphasized their request to have normal operating expenses approved. They further stated that they were unwilling to accept the severe consequence of a total asset freeze, which they equated to a “death penalty.” Furthermore, Binance.US also raised the possibility of discontinuing its operations in the U.S. To which Farer said,

“There’s a back-and-forth about whether they’re shutting down or not shutting down.”

While the SEC is yet to prove that the exchange-listed securities, several fear that Binance may soon veer out of the U.S.