Judge Amy Berman Jackson and Gubir S. Grewal, head of enforcement for the SEC | U.S. District Court photo; Justice Department photo
In a recent development in the ongoing legal battle between the Securities and Exchange Commission (SEC) and Binance.US, a federal judge rejected the SEC's request to freeze the assets of Binance's American operation, BTC News said.
However, Judge Amy Berman Jackson did approve what was described as an "unprecedented agreement to expedite the case and ensure that U.S. customers’ assets remain in the country, according to June 16 court filings," Cryptoslate.com reported.
Jackson said the parties should reach an agreement on limits without resorting to asset freezing, allowing Binance.US to continue its operations. She ordered that negotiations between the SEC and Binance.US continue while requiring the exchange to provide a breakdown of its business expenses.
One of the key concerns Berman raised was the absence of concrete evidence that clients' funds were being transferred outside the United States. She said the SEC failed to prove that Binance representatives, including founder Changpeng Zhao, had access to the assets of the U.S. unit. The SEC's legal team argued that Binance, being an international platform, "has enough private key segments to do so." However, no substantial evidence was presented to support this claim, BTC News said.
"I want to know if this is happening or not," Jackson said. "It’s amazing that I had to ask each of you."
Another point of contention in the courtroom was the SEC's inability to clearly distinguish between "regular" cryptocurrencies and crypto assets that are considered securities. Jackson questioned the SEC's legal counsel about the SEC's precise criteria for determining this distinction but didn't receive a satisfactory response, BTC News said.
The SEC, despite the spanking from the judge for being unable to answer questions about alleged transfers of assets, called the judge's action a victory.
"The Securities and Exchange Commission today secured emergency relief in which all the defendants in its litigation against Binance Holdings Limited, BAM Management US Holdings Inc., BAM Trading Services Inc., and Changpeng Zhao agreed to repatriate to the United States assets held for the benefit of customers of the Binance.US crypto trading platform," a June 17 SEC press release said.
"The order from the United States District Court for the District of Columbia also prohibits defendants BAM Trading Services Inc. and BAM Management US Holdings, Inc. (together, “BAM”) from spending corporate assets other than in the ordinary course of business," the SEC release said.
The SEC's legal action against Binance and Zhao has been closely watched by the cryptocurrency community. Binance, known as one of the largest global cryptocurrency exchanges, has faced increased regulatory scrutiny in various jurisdictions.