The United States Securities and Exchange Commission (SEC) and Binance US, the American arm of the global cryptocurrency exchange Binance, have entered into negotiations in an effort to avoid a complete asset freeze. This development of SEC and Binance US to negotiate a deal comes after the SEC raised concerns about potential securities law violations by Binance US.
The SEC’s scrutiny of Binance US, one of the largest cryptocurrency exchanges in the United States, has been ongoing for several months. The regulatory body expressed concerns over the exchange’s compliance with securities regulations related to its trading of digital assets. The SEC’s investigation aimed to determine if Binance US had offered and sold securities without registering with the commission, which would be a violation of federal securities laws.
United States District Judge Amy Berman Jackson has issued an order mandating that the two parties engage in negotiations with the aim of reaching a compromise.
Collaborative Efforts to Preserve Customer Funds and Avoid Exchange Shutdown
Binance US and the United States Securities and Exchange Commission have reached an agreement to collaborate on a solution that would prevent a complete freeze of the exchange’s assets.
According to a Bloomberg report on June 14, U.S. District Judge Amy Berman Jackson has directed both parties to seek assistance from a magistrate judge in order to develop a compromise arrangement that ensures the safeguarding of customer funds while avoiding the need for the exchange to cease operations.
During a hearing on June 13, Judge Jackson expressed concerns about the substantial repercussions that would arise from a complete shutdown of the exchange, stating that it would have far-reaching implications not only for the company itself but also for the overall digital asset markets.
Judge Jackson’s Stance and Timetable for Resolution
Judge Jackson emphasized that she would withhold a final ruling on the SEC’s motion for a temporary restraining order until the two entities had resolved the matter with the assistance of the magistrate.
A progress update on SEC and Binance US to negotiate a deal conducted with the magistrate has been slated for the close of business on June 15. Furthermore, she observed a perceived proximity between the SEC and Binance US in their efforts to reach a consensus on the issue.
Prior to Judge Jackson’s ruling during the hearing, former SEC enforcement attorney John Read Stark shared with his 20,000 Twitter followers that there was substantial disagreement regarding the desired outcomes of each party involved in the proceedings.
Stark clarified that despite the situation, the judge still has the authority to issue a compromise and facilitate a shared understanding between the parties involved.
SEC Alleges Mishandling of Funds by Binance US and CEO Zhao
On June 6, the SEC took urgent action by filing a motion for a temporary restraining order against Binance US, claiming that Binance CEO Changpeng “CZ” Zhao had the capability to access customer funds held by Binance US.
According to the regulator, it was alleged that Zhao had transferred $12 billion of Binance’s funds through a controlled entity named Merit Peak.
In a joint memorandum submitted on June 12 prior to the restraining order hearing, both Binance US and Zhao refuted the accusations of mishandling funds. They contended that the SEC was unable to provide any evidence of Binance US customer funds being misused in any instance.
In conclusion, the United States Securities and Exchange Commission (SEC) and Binance US are actively engaged in negotiations to find a resolution that addresses the SEC’s concerns while allowing the exchange to continue its operations. US District Judge Amy Berman Jackson has ordered both parties to work towards a compromise, recognizing the potential consequences of a complete asset freeze.
The judge has postponed making a final decision on the SEC’s motion for a temporary restraining order until progress is made through the assistance of a magistrate judge. The outcome of these negotiations will have significant implications for both Binance US and the broader cryptocurrency industry in the United States.
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