The largest cryptocurrency exchange in the world, Binance and Binance.US have signed a deal with the US Securities and Exchange Commission to guarantee that US client assets stay in the country up until the end of a broad lawsuit the regulatory body launched this month.
The court documents that revealed the arrangement were submitted late on Friday, and the federal judge presiding over the case must still approve it. The Agreement permits only Binance.US staff to access those assets to ensure they do not move abroad.
On June 5, the SEC filed a lawsuit against Changpeng Zhao, the CEO and creator of Binance.US's operator accused Binance of inflating its trading volumes manually, misusing client money, failing to restrict US users from accessing its platform, and misleading investors regarding its market monitoring controls.
The lawsuit and one the SEC filed the next day against the largest US exchange Coinbase marked an unprecedented increase of US regulators' crackdown on the sector.
According to the deal, which does not end the SEC case, Binance.US is going to take action to ensure that no employees of Binance Holdings can access private keys for any of its wallets, root access or hardware wallets to Binance.US's Amazon Web Service tools, according to court documents.
In a statement made public on Saturday, the SEC stated that Binance.US clients had been granted an emergency relief order, which will safeguard their assets and make sure they are capable of withdrawing them.
These restrictions are necessary to safeguard investor money because Changpeng Zhao and Binance have authority over the platforms' client assets and are free to commingle or redirect those assets as they like. The remark was made by Gurbir Grewal, the director of SEC's enforcement section.
A spokeswoman for Binance said in an announcement on Saturday that although they believe that the SEC's request of emergency relief was wholly unnecessary, they are delighted that the dispute surrounding this request was settled on mutually agreeable terms. On all platforms connected to Binance, user funds have always been secure and will continue to be so.
Other terms of the proposed deal require Binance.US to establish new cryptocurrency wallets to which workers of the global exchange do not have access, give additional information to the SEC, and consent to a speedy discovery schedule, according to the documents.
Last week, Binance's US unit halted accepting dollar deposits and gave customers until June 13 to withdraw their dollar funds in response to the SEC's request that a court order the freezing of its assets.