Binance U.S. and the Securities and Exchange Commission (SEC) have reached an agreement to repatriate customer funds to the United States.
The deal means Binance has avoided having its assets frozen and will be able to continue serving its U.S. customers.
SEC Requires Binance to Repatriate U.S. Customer Funds
The last-minute deal came after Judge Amy Berman Jackson ordered the two parties to work together.
Originally, the SEC had sought a court order to freeze funds, arguing that it was necessary to:
“prevent dissipation or transfer of those assets from the jurisdiction of this Court, and protect this Court’s ability to award relief in the form of disgorgement, prejudgment interest, and civil penalties.”
However, Judge Jackson acknowledged that such a freeze would hamstring Binance’s U.S. business and pass the SEC a major victory just days into its lawsuit against the firm. In order to avoid such an outcome, she asked both sides to reach a compromise.
On Saturday, the Commission announced that it had secured an agreement to repatriate Binance U.S. customers’ assets to the United States. The company and its associated entities are also prohibited from spending corporate assets “other than in the ordinary course of business.”
Binance’s CEO Changpeng Zhao is also named as a party to the agreement, which takes the form of a consent order.
Both Sides Claim Compromise as Victory
The SEC has painted the latest deal as a win that will prevent Binance from running off with customer funds. However, Binance has also claimed the incident as a victory, noting that the SEC has failed in its attempts to shut down the U.S. exchange.
In a statement on Saturday, Binance U.S. emphasized that the SEC has presented no evidence to suggest it has ever misused customer assets.
Rather, the firm construes the SEC’s legal maneuvers as an attempt to hurt its business by any means possible. As it stated:
“The SEC’s request would have effectively shuttered our business, which is consistent with the agency’s continued attempts to kill the crypto industry by any means, even by making allegations that are not supported by the facts.”
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Loss of Banking Capacity Hits Binance’s U.S. Business
Binance may have narrowly avoided having its assets completely frozen. But it is still struggling under the pressure of the SEC’s lawsuit.
One major factor inhibiting the company’s performance in the U.S. is the loss of its banking partners.
This week, Several banks temporarily suspended Binance-administered accounts pending Judge Jackson’s decision. And the firm was left struggling to serve USD customers. It said that as a result restrictions, it was unable to process up to 15% of USD withdrawal requests.
The platform said dollar-flows have been “throttled” by its banking partners. And amid fear that Binance could be subject to a court-ordered asset freeze, the exchange has been hemorrhaging users. From around 20% in April, Binance U.S.’ market share has plummeted to just 1% this week.
But will Binance recover its full USD banking capacity now that the SEC’s request has been dismissed? That remains to be seen.
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