Binance.US Granted Court Approval to Invest in Treasury Bills

Highlights:

• Binance.US can invest customer assets in U.S. Treasury bills following court approval.
• The exchange must transfer crypto assets to a third-party custodian not affiliated with Binance.
• The court’s decision enhances transparency and accountability within Binance’s U.S. operations.

Binance.US has secured judicial approval to invest customer assets in U.S. Treasury bills, marking a significant development in its ongoing legal battle with the SEC. Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia has authorized Binance’s U.S. entities to invest in these safe assets and transfer crypto holdings to non-affiliated custodians.

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Key Court Order Details

Judge Jackson’s order permits BAM Trading Services and BAM Management US Holdings, collectively known as BAM, to invest customer assets in U.S. Treasury bills. These investments are considered safe as they are backed by the U.S. Treasury Department. 

Additionally, Binance.US must transfer its crypto assets to third-party custodians not affiliated with the exchange. This move is part of an effort to comply with last year’s consent order and enhance the transparency and security of customer assets.

The order also allows BAM to invest its corporate assets in the ordinary course of business and a limited subset of customer assets as defined in the order. The U.S. Securities and Exchange Commission (SEC) has agreed not to oppose the relief requested by Binance.US, which marks a notable cooperation between the regulatory body and the crypto exchange.

Implementation of Court Order

Following the court order, BinanceUS must work with third-party investment advisers to manage BAM’s assets. These advisers will help ensure that BAM’s investments in U.S. Treasury bills are executed properly and that sufficient liquidity is maintained for customer withdrawal requests. The investments must mature on a rolling four-week basis, ensuring ongoing compliance with the court’s stipulations.

Moreover, Binance.US has conferred with SEC counsel regarding the relief. While the SEC disagrees with the crypto exchange’s assessment of whether the relief sought implicates the consent order, it has agreed not to oppose the relief requested.

Background and Legal Context

This judicial decision comes amid a broader legal battle initiated by the SEC against Binance and its former CEO, Changpeng Zhao. The SEC’s lawsuit, filed last year, accuses Binance of misleading customers, failing to restrict U.S. investors from accessing Binance.com, and misappropriating funds to separate investment entities owned by Zhao. Zhao is currently serving a jail sentence for charges brought by the Department of Justice.

Last month, Judge Jackson largely denied Binance’s motion to dismiss the SEC’s case but dismissed some claims, including the classification of secondary sales of BNB as securities. This partial victory provided significant clarity for Binance, especially regarding the status of BNB’s secondary sales and BUSD’s sales.

In addition to the court order, the ongoing legal proceedings will continue to shape the future of Binance and the crypto industry. Judge Jackson has ordered the parties to file a joint submission by July 29 for further proceedings. Binance and the SEC are also required to set deadlines for any motion to amend the complaint or for relief from the recent decision on a motion to dismiss.

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