In a recent development, Binance.US and the United States Securities and Exchange Commission (SEC) have embarked on a cooperative effort to resolve their differences and avoid freezing the exchange’s assets. The move comes after U.S. District Judge Amy Berman Jackson referred the two parties to a magistrate judge to explore a compromise arrangement to safeguard customer funds without necessitating a shutdown.
On June 14, Bloomberg disclosed that Judge Amy Berman Jackson, during a hearing on June 13, emphasized the potential consequences of completely shutting down Binance.US. She recognized its impact on the company and the broader digital asset markets, so she called for a compromise. Consequently, the judge referred the case to a magistrate judge for further negotiation.
Judge Jackson clarified that she would refrain from making a final decision on the SEC’s motion for a temporary restraining order until the two parties could work through the situation with the magistrate. A progress update on the ongoing negotiations is scheduled for the end of business hours on June 15.
Moreover, the judge expressed optimism about the possibility of an agreement between the SEC and Binance.US, indicating that they appeared to be relatively close in their positions. This suggests that finding common ground and reaching a compromise is feasible.
During the hearing, former SEC enforcement attorney John Read Stark, in a tweet to his 20,000 followers, acknowledged the conflicting objectives of the parties involved. However, he stressed that despite these differences, the judge could still order a compromise that resolves the dispute satisfactorily.
The SEC’s emergency motion for a temporary restraining order, filed on June 6, accused Binance CEO Changpeng “CZ” Zhao of having unauthorized access to Binance.US customer funds. The regulatory body further alleged that Zhao had transferred $12 billion through an entity under his control named Merit Peak.
Both Binance.US and Zhao vehemently denied these allegations in a joint memorandum submitted prior to the hearing. They challenged the SEC’s inability to provide evidence of mishandling customer funds and argued that the emergency was merely manufactured by the SEC for its purposes.
The negotiations between Binance.US and the SEC, facilitated by the magistrate judge, signify a concerted effort to protect customer funds while avoiding the drastic measure of freezing the exchange’s assets. The outcome of these discussions will be revealed in due course.