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Binance, SEC Agree to Keep US Client Funds in Country

FILE PHOTO: Representations of cryptocurrencies are seen in front of displayed Binance logo in this illustration taken November 10, 2022. REUTERS/Dado Ruvic/Illustration

BNR – Binance, the globe’s largest crypto exchange, and Binance.US have signed a deal with the Securities and Exchange Commission (SEC) in the United States. The deal ensures that U.S. client funds remain in the country until a regulatory agency lawsuit is settled.

The deal, which was revealed in court papers filed late Friday, still needs to be approved by the federal judge supervising the litigation. To ensure that US client funds don’t go overseas, the deal restricts access to these funds to US employees only.

On 5 June, the SEC filed a lawsuit against the trading platform, its CEO and founder Changpeng Zhao, and the operator of Binance.US. SEC accused the platform of inflating trading volumes and diverting client funds. Also, it failed to limit US clients’ access to its system and deceived investors about its market monitoring controls.

The suit, along with another filed against Coinbase, represented an escalation of a crackdown on the industry by US regulators.

Binance.US Safeguarding Investor Assets

Binance.US will ensure that no Binance Holdings managers have access to private keys for its multiple wallets. Also, it will block access to hardware wallets and root access to Amazon Web Services tools.

According to the SEC, the emergency relief order obtained for Binance.US clients will safeguard their funds.  It will additionally guarantee that they can keep withdrawing those funds.

“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please,” said Gurbir Grewal, director of the SEC’s enforcement division. “These prohibitions are essential to protecting investor assets.”

Binance.US will establish new digital currency wallets to which no staff members of the global platform will have access under the terms of the deal. It will also provide the SEC with more details and concur with an expedited discovery timetable.

Binance’s US subsidiary ceased dollar deposits last week. After SEC requested to freeze the company’s assets, the latter provided customers until 13 June to withdraw their dollar funds.


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