US District Judge, Amy Berman Jackson, denied the SEC’s request to issue a temporary restraining order (TRO) to freeze the assets of Binance.US, the US subsidiary of crypto exchange Binance. This would enable the firm’s US arm to continue operating while avoiding restrictions from the financial regulator.
On Tuesday, Jackson said the ban would not be necessary if the two sides mutually reached an agreement. She added that both parties are not far apart on ways to save billions of dollars in clients’ assets.
On June 5, the SEC filed 13 civil charges against Binance and Binance.US. Some of the financial regulator’s proposed charges included mishandling user funds, artificially inflating the site’s trading volume, operating an unregistered exchange, and taking steps to avoid US regulation.
Following the lawsuit, the commission sought an emergency TRO to freeze Binance.US funds last week. But the company vehemently opposed the SEC’s call, arguing that suspending the flow of assets would hurt its customers and cripple its business. Binance.US attorneys told the judge they were not ready to welcome the “death penalty for eight days in our case.”
Additionally, the defendants criticized the SEC for making false statements in a 42-page document jointly filed by Changpeng Zhao and Binance.US. The company said there was no clear evidence of impropriety to justify an immediate assets freeze.
Binance’s court filing started:
“Indeed, there is no ‘emergency’ here at all, other than the one manufactured by the SEC for its own purposes.”
Judge Slams Regulator’s Enforcement Action
The judge denied the agency’s request in response to arguments from Binance.US’s legal team and a motion filed by the SEC. However, both parties have been directed to develop a plan to enable the platform to function normally to keep users’ assets safe.
The judge said:
“Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general. (Work it out) – The nitty-gritty of it is better handled by you than by me.”
To reach a deal, the SEC requires that all clients’ assets be returned to the US if any are held elsewhere. The company has not yet objected to the proposal.
The judge ordered Binance.US to submit details of recurring expenses and operational costs to the court and ordered the two parties to continue negotiations. The judge also ordered them to submit a summary report on the status of negotiations by Thursday.