SEC and Binance.US reach agreement on asset freeze

A federal judge has signed off the agreement between Binance Global, Binance.US and SEC that ensures only employees in the U.S. can access customer funds, rather than immediately freezing the assets. The broader lawsuit wasn’t affected by the agreement.

The proposed agreement was finalized late Friday, and federal judge Amy Berman Jackson signed it early Saturday. Under the agreement, only Binance.US employees can have access to software and hardware wallets or root access to Binance.US’ Amazon Web Services tools.

In addition, Binance.US must answer in an expedited discovery schedule to the court and the regulator in the coming weeks and provide detailed information about its business expenses, including estimated costs.

While SEC pursues Binance Global and Binance.US for securities violations, the judge suggested last week that the two parties should settle. SEC argued that the judge should issue an injunction to prevent Binance.US from moving offshore or destroying its records. Binance.US said freezing its assets would be the “death penalty”.

Related: U.S. judge rejects SEC’s immediate asset freeze request for Binance.US

Judge Jackson advised the parties involved that it would be more beneficial for them to agree to a proposed settlement than to write an injunction. That injunction would be in effect for only two weeks, which, as she pointed out at an earlier hearing, doesn’t provide enough time to prepare, especially considering that the parties have already filed over 4,000 pages of evidence.

The investigation is ongoing, but U.S. customers can access their funds during this time. While the exchange denies the allegations, Binance.US is nevertheless relieved that the SEC request has been resolved, as it announced on Twitter:

This fight has damaged our business and our reputation but not our fighting spirit or our resolve to defend ourselves against unwarranted charges and “regulation by enforcement” tactics that do not belong in our system of justice.

Related: SEC sues CZ and Binance for multiple securities violations

Gurbir Grewal, SEC Director of Enforcement, said in a press release:

Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please, as we have alleged, these prohibitions are essential to protecting investor assets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “Further, we ensured that U.S. customers will be able to withdraw their assets from the platform while we work to resolve the alleged underlying misconduct and hold Zhao and the Binance entities accountable for their alleged securities law violations.