Binance, SEC propose to limit fund access to U.S. staff
- Binance.US will also be required to create new crypto wallets inaccessible to the employees.
- U.S.-based customers can still withdraw their funds during this period.
Binance, Binance.US and the Securities and Exchange Commission (SEC) proposed an agreement to limit customer funds only to Binance.US employees in the short term.
Binance recently asked the court to deny the U.S. SEC’s request for a temporary restraining order (TRO) since it would effectively put the company out of business. The regulator expressed its concern that if a TRO was not obtained, funds may be transferred overseas or documents erased.
The judge referred both the SEC and Binance to a magistrate judge to sort out a compromise. This was to protect customer funds without winding down the exchange. The move allows the exchange to avoid freezing all of Binance.US’s assets.
Binance.US will take precautions to ensure that no authorities from Binance Holdings have access to private keys for its different wallets, hardware wallets, or root access to its Amazon Web Services (AWS) tools. Furthermore, the crypto trading platform will publish full information about its operational expenses, including expected costs, in upcoming weeks.
Other provisions in the proposed agreement will require Binance.US to create new crypto wallets inaccessible to the employees of its global exchange unit, give additional information to the SEC and agree to an expedited discovery timeline.
U.S.-based customers can still withdraw their funds during this period.
No relief in sight for now
The SEC charged Binance, Binance.US and Zhao for allegedly violating securities laws in the U.S. According to the regulatory authority, the firms operated as an unregistered securities exchange, broker, and clearinghouse all in one, allowing U.S. consumers to trade in tokens.
The regulator also alleged that Binance and CZ could access customer funds, moving millions to CZ-owned enterprises such as Merit Peak and Sigma Chain.
Binance had already dismissed these allegations. The proposed agreement still needs signing off from the federal judge overseeing the case.