Binance, the world’s largest cryptocurrency exchange, has reached a deal with the US Securities and Exchange Commission (SEC) to resolve a lawsuit that accused it of operating as an unregistered securities exchange and misappropriating customer funds. The deal, which is pending approval from a federal judge, will allow Binance to continue its US operations under certain conditions.
According to the proposed agreement , Binance will transfer all assets held for the benefit of its US trading customers to new digital wallets that are accessible only by Binance.US employees. Binance.US is the US affiliate of Binance that was launched in 2019 to comply with local regulations. The agreement also prevents Binance Holdings staff from having access to private keys for US wallets or any tools or data related to Binance.US.
The SEC had alleged that Binance violated multiple securities laws by offering trading of digital assets that are considered securities without registering with the agency or complying with its rules. The SEC also claimed that Binance diverted customer funds to a third party that was owned by its CEO, Changpeng Zhao, without disclosing this fact to investors. The SEC sought to freeze Binance’s assets and impose civil penalties and disgorgement of ill-gotten gains.
Binance has denied any wrongdoing and said that it cooperated with the SEC throughout the investigation. Binance also said that it has always prioritized compliance and customer protection and that it will continue to do so in the future. Binance said that the deal with the SEC is a positive step forward for the cryptocurrency industry and its users.
The deal with the SEC comes amid increased scrutiny and regulation of cryptocurrency exchanges by US authorities. In August 2021, SEC chair Gary Gensler said that investors were not adequately protected in crypto markets and called them more like the “Wild West”. The SEC has also sued Coinbase, the other major US cryptocurrency exchange, for allegedly offering unregistered securities products. The cryptocurrency industry has faced several challenges and scandals in recent years, such as market volatility, hacking incidents, fraud cases and environmental concerns.
