Proposed Binance Agreement with SEC Aims to Safeguard U.S. Customer Funds

Binance coinsGenerated image of worthless Binance coins.

Binance, the global cryptocurrency exchange, and its American affiliate, Binance.US, are on the brink of a pivotal agreement with the U.S. Securities and Exchange Commission (SEC). Court documents released on June 17th, 2023, suggest a deal aimed at securing the rights and finances of U.S. based customers by limiting the access to these funds exclusively to Binance.US employees. The deal, however, is yet to be sanctioned by the federal judge overseeing the case.

In a move that highlights the crux of the proposed agreement, Binance.US has committed to implementing measures that prohibit officials from Binance Holdings from accessing any form of private keys. These keys could potentially provide access to various wallets and hardware wallets or enable root access to Amazon Web Services tools owned by Binance.US.

The implementation of this agreement comes in response to a lawsuit filed by the SEC against Binance, its CEO Changpeng Zhao, and the operator of Binance.US. This lawsuit represents a marked ramp-up in the ongoing tussle between cryptocurrency industry players and U.S. regulators, which have become increasingly apprehensive about the sector’s lack of transparency and regulation. Notably, Coinbase, a major U.S. exchange, also faced legal action from the SEC shortly after Binance.

At the time of this report, both Binance.US and the SEC have yet to respond to requests for comment.

This proposed agreement took center stage after the SEC appealed to the court to freeze all Binance.US assets. This move compelled Binance.US to halt all dollar deposits and set a deadline of June 13 for customers to withdraw their dollar-denominated funds.

The proposed agreement further mandates Binance.US to create new crypto wallets inaccessible to the employees of its global parent company, Binance. This initiative intends to establish an additional layer of protection for U.S. customers. Alongside this, Binance.US will also be required to disclose further information to the SEC and adhere to an expedited discovery schedule.

The deal addresses the SEC’s request for a temporary restraining order. Still, it awaits the approval of the presiding judge. The SEC’s lawsuit against Binance and Binance.US alleges the companies of offering and trading unregistered securities. It also accuses the firms of commingling substantial funds and carrying out poor practices. Although the agreement does not delve into the details of the broader lawsuit, it does highlight some of the pressing issues at hand.

Despite the stringent legal proceedings, Binance.US has confirmed that U.S. customers will continue to have the ability to withdraw their funds during this period. This affirmation serves to reduce anxiety amongst the platform’s users and upholds the company’s commitment to ensuring their customer’s financial security.

The proposed agreement, if accepted, will mark a significant milestone in the evolving relationship between cryptocurrency firms and regulatory bodies. As the broader lawsuit unfolds, the fate of Binance, Binance.US, and the impact on their customers hangs in the balance, the world watches and waits.

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