US district judge Amy Berman has asked the Securities and Exchange Commission (SEC) to reach a compromise agreement with Binance.US on the best possible way to protect users’ funds on the platform instead of completely freezing the company’s assets as requested by the watchdog.
As part of its June 5 enforcement action against Binance, the world’s flagship crypto exchange, the SEC filed an emergency motion for a restraining order against Binance.US, asking a Washington D.C. federal court to freeze the entire assets of the latter.
Binance.US filed a response opposing an SEC’s proposed restraining order to freeze its assets, labeling it as “draconian and unduly burdensome.” In the suit, Binance.US argued that freezing its assets would victimize its US customers and make it impossible for the company to continue operating normally.
In the latest development, U.S. District Judge Amy Berman has asked both parties to agree on how to best protect users’ funds without necessarily freezing Binance.US’s assets. At the same time, prosecutors continue to look into Binance’s case with the SEC.
“Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general.”
U.S. District Judge Amy Berman
Customer assets to be repatriated
As part of the compromise agreement, Binance.US has asked the court to permit it to continue paying its employees and use funds to settle operating expenses. The exchange has also pledged that no asset transfers or payments would be made to benefit any Binance entity without an express court order in favor of such transactions.
On the other hand, the SEC has asked the court to mandate Binance to repatriate customer funds to the United States, where entities within the country will be in absolute control of the assets. Binance.US is expected to submit its list of operating expenses to the court today.
Gary Gensler’s SEC has been criticized for its enforcement-style crypto regulation and failure to formulate clear-cut guidelines for the nascent web3 industry.
House Majority Whip Tom Emmer and Rep. Warren Davidson recently floated a bill called the “SEC Stabilization Act,” which aims to oust Gensler as the agency’s head while restructuring it.
