Binance, Binance.US, and the United States Securities and Exchange Commission (SEC) reportedly agreed on Friday, June 16, to temporarily limit access to client funds exclusively to Binance.US employees.
According to reports, the proposal agreement, pending approval by the supervising federal judge, outlines measures for Binance.US to prevent any access by Binance officials to the private keys of wallets, hardware wallets, or root access to Binance's Amazon Web Services tools. US. Additionally, the US-based crypto trading platform will release full information on trading expenses, including estimated costs, in the coming weeks.
The settlement came as a direct response to a motion filed by the SEC seeking to freeze all of Binance.US's assets during ongoing legal proceedings. The regulator expressed fear that without a temporary restraining order granted, there could be a risk that funds could be transferred abroad or that crucial records would be deliberately destroyed.
However, legal representatives for Binance.US strongly opposed the idea, claiming that imposing a complete freeze on all assets would essentially amount to administering an excessively harsh “death penalty” to the company.
During a hearing earlier this week, US District Court Judge Amy Berman Jackson warned the parties involved that it would be to their advantage reach an agreement on a proposal stipulation rather than relying on the court to make a restraining order. The judge emphasized that a temporary restraining order is limited in duration to two weeks, which might be inappropriate for a full hearing. This is particularly true when considering the substantial volume of evidence submitted, amounting to more than 4,000 pages.
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The proposed deal includes additional provisions, such as the creation of new crypto wallets by Binance.US, which will be inaccessible to employees of other Binance entities. Additionally, Binance.US agrees to provide additional information to the SEC and agrees to an expedited discovery schedule. In particular, US-based clients will retain the ability to withdraw funds during this period.
If accepted, the proposed settlement will partially address the SEC's concerns while the broader lawsuit progresses. The SEC recently sued Binance and Binance.US for trading unregistered securities, and alleged mix of funds and bad practices. However, the proposed settlement does not cover the broader lawsuit.
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