Binance.US and SEC agree to negotiate to avoid asset freeze, mediation to continue on Wednesday

Binance.US and the U.S. Securities and Exchange Commission (SEC) held a hearing yesterday to negotiate over allegations of illegal operations to avoid a full asset freeze on the cryptocurrency trading platform. According to a report by Bloomberg, the two parties are not far apart in their positions and have referred the matter to a judge for further discussions.

Preliminary Mediation Ahead of Thursday's Report 6/15 Update

Negotiations Have Preliminary Consensus, All Assets Freeze Likely Avoided

U.S. District Judge Amy Berman Jackson stated that Binance.US and the SEC are not too far apart in their positions on protecting customer funds and litigation, and they have been referred to a magistrate for further negotiation and compromise agreements, with a report to be filed with the court by the end of Thursday. The judge said that if an agreement can be reached between the two parties, she would no longer need to rule on the SEC's temporary restraining order.

SEC Cautious on Fund Security

The SEC's allegations against Binance.US include improper handling of customer funds, misleading investors and regulators, and violations of securities laws. The SEC has also requested a freeze on Binance.US assets to prevent funds from being transferred overseas.

As part of its proposal, Binance has proposed transferring U.S. customers' crypto assets to new wallets with new private keys, which will be solely controlled by Binance.US's U.S.-based personnel.

In the compromise proposal submitted, the SEC requests that Binance return customer assets to the U.S., to be controlled by entities beyond Zhao Changpeng's reach and to handle customer redemptions.

Regulators Focus on Operational Needs

Binance.US's attorneys argued that freezing all funds would cripple the business and harm customers. They stated that the exchange needs the ability to pay for daily operational expenses such as rent, salaries, and supplier payments. They also pledged not to transfer any assets or make any payments to benefit other Binance entities without a court order.

The SEC has requested Binance.US to provide accounting reports on business and professional fees to help regulators better understand the conditions necessary to sustain operations. The judge also ordered Binance.US to submit its list of business expenses by Wednesday.

Despite active negotiations to avoid a complete asset freeze, the SEC remains skeptical of Binance.US's operations. Regulators emphasize the importance of fund security and customer protection, seeking appropriate solutions to ensure the exchange's compliance and safeguard customer interests.