Binance.US Halts Direct Dollar Withdrawals Amid Regulatory Scrutiny Following tense negotiations and legal proceedings, the United States-based operations of cryptocurrency exchange giant, Binance, have finally received some much-needed respite.
A ruling by U.S. Judge Amy Berman Jackson on June 17 saw the approval of an agreement between Binance.US, Binance, and the Securities and Exchange Commission (SEC).
This critical decision dismissed an erstwhile Temporary Restraining Order (TRO) that threatened to immobilize all Binance.US assets.
Breaking the impasse
The path towards this resolution was paved by Judge Jackson’s earlier remarks on June 14, urging the opposing parties to reach an agreement independently, avoiding the need for judicial intervention. Heeding this counsel, the warring factions found common ground by June 16.
The decision was welcomed by Binance.US, as it narrowly avoided the SEC’s proposed asset freeze which, according to them, was unwarranted both in light of the facts and under the law.
In a statement on Twitter, they voiced their satisfaction, declaring that customer funds would remain under the control of Binance.US employees until the resolution of all ongoing litigation.
Under the approved deal, U.S.-based Binance customers will continue to retain the ability to withdraw their funds throughout the pending litigation.
This decision undoubtedly serves as a beacon of hope for customers, affirming the judiciary’s commitment to safeguard their financial interests.
The agreement sets in place rigorous safeguards to protect client assets. It prohibits Binance global officials from accessing the private keys of wallets, hardware wallets, or gaining root access to Binance.US’s Amazon Web Services tools.
Responding to allegations of fund mismanagement, Binance.US maintained that the SEC had been unable to furnish any evidence indicating any misuse of customer assets.
A unique provision
John Reed Stark, former chief of the SEC’s Office of Internet Enforcement, drew attention to a “particularly interesting provision” about the repatriation of certain assets to the U.S.
This clause mandates the repatriation of all customer-held fiat and cryptocurrency assets to the U.S., entrusting their control and custody to BAM Trading.
In line with this, Binance.US must also ensure a prompt, verified written accounting of all accounts linked to BAM entities valued over $1,000.
These developments follow the SEC’s emergency motion for a temporary restraining order on Binance.US filed on June 6. The regulatory body had expressed concerns over Binance CEO Changpeng “CZ” Zhao’s purported access to Binance.US customer funds.
Allegations were made against Zhao, accusing him of funneling $12 billion of Binance’s funds via Merit Peak, an entity he allegedly controlled.
In the face of these allegations, Binance.US and Zhao filed a joint memorandum denying any mishandling of funds, pointing out that the SEC has failed to highlight a single instance where Binance.US customer funds have been misused.
This ruling, while a relief for Binance and its customers, signals the increasing scrutiny that cryptocurrency exchanges are under.
It underscores the need for comprehensive regulation in the rapidly growing cryptocurrency market, a sector that is notorious for its volatility and potential for misuse.
As for Binance, this decision might provide a glimmer of hope for the embattled company, indicating that regulatory hurdles, while formidable, are not insurmountable.
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