Following the order of U.S. District Judge Amy Berman Jackson, SEC and Binance have agreed to work on a compromise arrangement that will allow the exchange to avoid asset freezing
On June 14, U.S. District Judge Amy Berman Jackson referred SEC and Binance.US to a magistrate judge to develop a compromise arrangement that would allow them to protect customer funds without shutting down the exchange and freezing all crypto assets.
Judge Jackson believes that the closure of Binance’s American subsidiary “would create significant consequences not only for the company but for the digital asset markets in general.”
Therefore, she wouldn’t reach a final decision on the SEC’s motion for a temporary restraining order until the plaintiff and defendant had jointly found a compromise with the magistrate.
The next negotiations update is scheduled for the end of business hours on June 15.
Until this move, the two organizations failed to reach a mutual understanding of the future of customer and corporate assets of Binance.US. While SEC requested to freeze the company’s assets, Binance proposed to ease some of the restrictions.
Namely, the relevant filing offered offer more assurances for the SEC (e.g. that Binance will be prohibited to make payments or transfer any assets to or for the benefit of any Binance entity or individual acting on its behalf) while also allowing the company to continue making payroll payments and transfers on other financial commitments.
The crypto exchange and its lawyers believe that the SEC’s request for the asset freeze didn’t meet the burden of proof required by the court. “Indeed, there is no ‘emergency’ here at all, other than the one manufactured by the SEC for its own purposes,” said the company representatives.
Originally, SEC sued Binance on June 6, alleging that the company manipulated customer funds, violated the security trading regulations and otherwise “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”
Both Binance.US and its CEO Changpeng “CZ” Zhao denied the claims that funds were ever mishandled and expressed their disappointment at SEC’s unwillingness to cooperate in the pre-trial investigation.
Commenting on the SEC’s decision to sue major global crypto exchanges, lawyer John Deaton noted that the SEC is probably “well aware” that a decision in the years-long Ripple case that bears similarities with today’s new cases will be published “in the very near future.” Hence, the rush to start the two new legal cases against Binance and Coinbase. The lawyer suggests SEC might have been afraid “to lose some political and legal momentum,” in case the Ripple case turns out negative for the regulator.