Only US employees granted access to customer funds: SEC

Binance and the SEC reach an agreement to protect customer funds, granting access only to Binance.US employees, pending court approval.

Only US employees granted access to customer funds: SEC

Saturday June 17, 2023,

2 min Read

Binance, Binance.US, and the U.S. Securities and Exchange Commission (SEC) have reached an agreement aimed at safeguarding customer funds. The agreement yet to be approved by federal judges, says that only Binance.US employees will have access to these funds in the near term, as per court documents obtained by Reuters.

Under the proposed agreement, Binance.US will implement measures to ensure that Binance Holdings officials do not possess private keys for its wallets, hardware wallets, or root access to Binance.US's Amazon Web Services tools.

This development follows the SEC's most recent lawsuit against the cryptocurrency exchange's CEO Changpeng Zhao, and the operator of Binance.US.

Binance.US had already halted dollar deposits and set a deadline of June 13 for customers to withdraw their funds in response to the SEC's request to freeze its assets.

Additionally, the proposed agreement includes provisions for Binance.US to create new crypto wallets inaccessible to employees of the global exchange. The agreement also involves providing the SEC with additional information and adhering to an expedited discovery schedule, according to the filed documents.

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The US Securities and Exchange Commission (SEC) is currently filing a lawsuit against Binance, the world's largest cryptocurrency exchange, and its CEO Changpeng Zhao (CZ) for alleged violations of federal securities laws. According to the SEC, all cryptocurrencies except Bitcoin (BTC) are considered securities.

The lawsuit claims that Binance, along with Binance.US and Zhao, have offered unregistered securities in the form of BNB crypto tokens and Binance-linked BUSD stablecoins to the general public. Additionally, the SEC alleges that Binance's staking service has violated securities laws.

In the lawsuit, the SEC specifically points out that Binance.US failed to register as a clearing agency, broker, and exchange. The regulatory body also claims that Binance allowed the mingling of customer funds, raising concerns over proper fund segregation. Furthermore, the SEC suggests that Zhao secretly controls Binance.US, with a Zhao-owned entity artificially inflating the trading volume of Binance.US.

The SEC has filed its complaint in the US District Court for the District of Columbia, aiming to address these alleged violations of securities laws by Binance and its CEO.

Edited by Akanksha Sarma