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SEC Obtains Emergency Relief to Ensure Binance.US Customer Assets Remain in US
Practical Law Legal Update w-039-8692 (Approx. 5 pages)
SEC Obtains Emergency Relief to Ensure Binance.US Customer Assets Remain in US
by Practical Law Finance
| Published on 22 Jun 2023 • USA (National/Federal) |
The SEC obtained emergency relief through the US District Court of the District of Columbia to, among other things, ensure that assets of US customers of Binance.US remain in the United States until the SEC's Binance litigation is resolved.
On June 17, 2023, the US District Court for the District of Columbia (DC district court) issued a consent order providing emergency relief that, among other things, ensures the assets of US customers of Binance.US remain in the United States until the SEC's Binance litigation is resolved (see Legal Update, SEC Charges Crypto Trading Platform Binance and Its CEO with Violation of US Securities Laws). The consent order also directs, among other things:
- Certain entities operating Binance.US and its founder and CEO, Changpeng Zhao (collectively, defendants) to repatriate to the US and transfer to US-based Binance affiliate BAM Trading all fiat currency and crypto assets that are deposited, held, traded, or accrued by Binance.US's US customers and confirm that BAM Trading maintains possession, custody, and control in the US of these assets.
- Defendants to ensure and confirm to counsel of record for the SEC that BAM Trading and BAM Management obtain and maintain sole possession, custody, and control of all Binance.US US customer assets and are limited to transfer of these assets solely for purposes set out in the consent order.
- That during the pendency of the litigation, BAM Trading and BAM Management provide the SEC’s counsel of record with a copy of the monthly report of BAM Trading and BAM Management's ordinary-course-of-business expenses, including the total amount spent and any amounts aggregating in excess of $150,000 to foreign payees.
- Defendants to restrain and enjoin themselves from destroying records relevant to the action.
On June 5, 2023, the SEC filed a complaint in the DC district court charging defendants with:
- Failure to register as broker-dealer.
- Failure to register as national securities exchange.
- Failure to register as clearing agency.
- Unregistered offer and sale of crypto-asset securities.
- Fraud and failure to prevent manipulative trading.
For further information on the SEC action, see Legal Update, SEC Charges Crypto Trading Platform Binance and Its CEO with Violation of US Securities Laws.
For further detail on SEC regulation of digital assets, see Practice Note, SEC Regulation of Digital Assets.