Binance, Binance.US and the Securities and Exchange Commission (SEC) reportedly revealed an agreement on Friday, June 16, that temporarily limits access to customer funds exclusively to Binance.US employees.
According to to reports, suggested agreement, pending approval from an overseeing federal judge, outlines measures for Binance.US to prevent Binance Holdings officials from having any access to wallet private keys, hardware wallets, or root access to Binance.US’s Amazon Web Services tools. In addition, the US-based cryptocurrency trading platform will publish comprehensive information on trading expenses, including estimated costs, in the coming weeks.
The proposed agreement emerged in direct response to a motion filed by the SEC to freeze all assets of Binance.US during the ongoing litigation related to securities-related charges. The regulatory body expressed concern that without a TRO being granted, there could be a risk of transferring funds abroad or intentionally destroying key records.
However, Binance.US legal representatives strongly opposed the idea, arguing that a complete freeze of all assets would essentially be tantamount to giving the company too severe a “death penalty”.
During a hearing earlier this week, Judge Amy Berman Jackson, presiding over the District Court for the District of Columbia, advised the parties involved that it would be better for them reach an agreement on the proposed rather than relying on them to draft a court order. The judge emphasized that the temporary restraining order is limited to two weeks, which may prove insufficient for a comprehensive and thorough hearing. This is especially true in view of the considerable volume of already registered exhibits, which amounts to more than 4,000 pages.
The proposed agreement includes other provisions, such as the creation of new Binance.US crypto wallets that will be inaccessible to employees of the global exchange. In addition, Binance.US agrees to provide additional information to the SEC and agree to an expedited discovery schedule. Customers located in the United States will retain the ability to withdraw funds during this period.
If accepted, the proposed settlement would partially address the SEC’s concerns while the broader litigation plays out. SEC recently sued Binance and Binance.US for trading in unregistered securities and alleged commingling of funds and malpractices. However, the proposed settlement does not include a broader lawsuit.