Under a court agreement, Binance can continue US operations while battling SEC fraud charges

The US Securities and Exchange Commission and Binance have reached an agreement in court that allows the world’s largest cryptocurrency exchange to continue operating in the US while it battles fraud charges with the SEC.

Under a consent order filed on Saturday, the defendants in the June 5 lawsuit agreed to return all assets held for the benefit of Binance’s US trading clients.

The SEC claims that Binance violated US law by operating as an unregistered securities exchange. Similar accusations were brought against the world’s other largest cryptocurrency exchange, Coinbase, almost simultaneously.

But Binance and its CEO, Changpeng Zhao, are facing additional fees for transferring customer funds — to hide the fact that it was amassing billions of dollars in investor assets and sending them to a third party that Zhao also owns.

As a result, the Securities and Exchange Commission requested that Binance’s US assets be frozen.

The order, signed by Washington, D.C., federal judge Amy Berman Jackson, bars the defendants from spending the company’s assets other than for ordinary business expenses. The law also requires SEC oversight of any spending and bars defendants from destroying records, the agency said in a statement.

The approval order required Binance to create new digital wallets for US customers and transfer assets to them within two weeks.

Scandals and market crashes have marred the cryptocurrency industry. Industry leaders say the SEC campaign indicates that US regulators believe cryptocurrency has no place in the traditional financial system.

In August 2021, SEC Chairman Gary Gensler said that investors were not sufficiently protected in the crypto markets, describing them as akin to the “Wild West.”

The collapse of cryptocurrency prices in the past year combined with the demise of several high-profile crypto companies – including FTX – has left investors with billions of dollars in losses.