In court, the U.S. Securities and Exchange Commission (SEC) and Binance have come to an agreement that allows the largest cryptocurrency exchange in the world to continue its operations in the United States amidst ongoing fraud charges brought by the SEC.
According to a consent order filed on Saturday, the defendants named in the lawsuit filed on June 5 have agreed to repatriate all assets held for the benefit of Binance’s U.S. trading customers.
The SEC’s allegations against Binance revolve around its violation of U.S. law by operating as an unregistered securities exchange. Similar charges were simultaneously filed against Coinbase, another leading cryptocurrency exchange.
In addition to these allegations, Binance and its CEO, Changpeng Zhao, are facing further charges related to the diversion of customer funds. It is alleged that Binance concealed the fact that it had been mixing billions of dollars in investor assets and sending them to a third party owned by Zhao.
Consequently, the SEC requested a freeze on the assets held on Binance’s U.S. platform.
Federal judge Amy Berman Jackson, based in Washington, D.C., has signed an order that prohibits the defendants from using corporate assets for anything other than regular business expenses. The order also mandates SEC supervision over any expenditures and prohibits the destruction of records, as stated by the agency.
As per the consent order, Binance is required to establish new digital wallets for its U.S. customers and transfer their assets to these wallets within a two-week timeframe.
Scandals and market disruptions have plagued the cryptocurrency industry. The SEC’s crackdown is seen by industry leaders as an indication that U.S. regulators do not perceive cryptocurrency as fitting within the traditional financial system.
In August 2021, SEC chair Gary Gensler expressed concerns about inadequate investor protection in crypto markets, likening them to the “Wild West.”
The decline in cryptocurrency prices last year, coupled with the downfall of several prominent crypto companies, such as FTX, resulted in investors suffering significant financial losses amounting to billions of dollars.
