Federal Judge Encourages SEC and Binance to Reach Agreement for Business Continuity amidst Securities Violation Charges

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Federal Judge Encourages SEC and Binance to Reach Agreement for Business Continuity amidst Securities Violation Charges

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In a court hearing, U.S. District Judge Amy Berman Jackson instructed the Securities and Exchange Commission (SEC) and Binance, a leading cryptocurrency company, to find a resolution that would permit Binance to continue its essential operations while defending itself against allegations of securities law violations. The SEC had requested an asset freeze on Binance's U.S. operations, but Judge Jackson declined the request for now. The SEC's lawsuit claims that Binance and its CEO, Changpeng Zhao, misused customer funds, misled investors, and evaded disclosure regulations. The SEC argued that freezing assets was necessary to protect the $2.2 billion in customer assets held by Binance.US, considering the unclear relationship between Binance's international operations and the shifting accounts regarding control. Binance.US argued that any freeze without an exemption for basic expenses would severely harm the business before it could mount a legal defense. Judge Berman Jackson directed both parties to engage with an administrative judge to negotiate a settlement and requested an update on the progress by Thursday.

Meanwhile, the SEC's legal action against Binance follows its increased crackdown on the cryptocurrency industry. Shortly after suing Binance, the agency also filed a lawsuit against Coinbase, the largest cryptocurrency trading platform in the U.S., alleging illegal non-registration under investment industry regulations. SEC Chairman Gary Gensler has emphasized the industry's non-compliance with the law since assuming office two years ago, warning of an impending reckoning. Gensler's urgency intensified after the collapse of former crypto trading giant FTX, prompting him to urge surviving companies to register with the agency to avoid legal consequences. Gensler reiterated this message to industry executives resisting regulation in a recent investment conference, emphasizing that not seeking regulation is not equivalent to avoiding it.