Federal Judge Refuses Restraining Order, Securing Binance.US Operations

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance and Binance.US, and in a crucial step, a federal judge denied to impose a temporary restraining order that would have frozen the American trading platform’s assets. This decision authorizes the company’s U.S. subsidiary to carry on with business as usual while negotiating restrictions with the regulatory body.

The D.C. District Court’s Judge Amy Berman Jackson underlined that a restraining order is not necessary if both parties can agree on the limitations. She also asked the parties to continue their discussions while instructing Binance.US to provide the court with a list of its business expenses. By the end of Thursday, a status update is anticipated.

SEC Attorneys Challenged in Courtroom Showdown

The judge became irritated with SEC officials over their request to freeze all corporate assets during crowded court session in Washington. The SEC attempted to seize the assets until it was certain that nobody—not even Binance founder Changpeng “CZ” Zhao—had access to the platform’s private keys.

The SEC attorneys were questioned by Judge Jackson about whether any consumer monies came from Binance.The US had really left the US. She demanded explanation after several SEC attorneys voiced worries about Binance’s global platform having enough private key shards to transmit money, stating, “I want to know if it’s happening or not. It’s stunning that I’ve asked each of you this.”

Sticking Point Addressed

The court signaled earlier in the day that she could be inclined to limit Binance’s access to Binance.US assets, but she refrained from imposing a full restraining order. She asked the SEC to compare its demands with what the corporations provided in place of a restraining order and demanded that the companies reconcile their suggested constraints.

SEC attorney Jennifer Farer reassured the judge that the SEC was open to allowing the business to continue operating throughout the process. Representatives of Binance.US stated that they wanted to be allowed to keep their regular running costs and that they were not willing to accept a complete asset freeze, which they compared to a “death penalty.”

The SEC attorney also called attention to the fact that Binance.US had repeatedly changed its story about how cryptocurrency assets and funds were held, going from claiming to have a contract with Binance to saying that the contract was inactive and then stopped.

Additionally, Binance.According to the lawyer, US told the SEC that it might stop operating in the US, necessitating the need for an emergency injunction. “There’s a back-and-forth about whether they’re shutting down or not shutting down,” Farber remarked. Despite these disagreements, Judge Jackson observed that the parties were not far apart and urged them to come to a resolution so that there would be enough time to go through the complexities of the case.

Understanding Securities vs. Commodities

A crucial issue at the heart of the dispute was examined by Judge Jackson: What constitutes a cryptocurrency as a security, and if it isn’t, does it fit under the heading of a commodity?

The judge asked some straightforward questions about the situation, but she wasn’t happy with the answers she got. She asked the SEC attorneys early on in the hearing to explain the difference between a “crypto asset” and a “crypto asset security.” While reserving the right to evaluate the remaining coins on the exchanges later, SEC attorney Matthew Scarlato stated that the regulator had cited many examples of cryptocurrencies thought to be securities in the larger complaint.

The judge probed further, asking the SEC and Binance representatives as well as the public, “Are the other cryptocurrencies commodities?” She answered a query that has bedeviled the cryptocurrency sector for years by looking into this matter. Attorney Matthew Martens responded, “It is a crypto asset,” when questioned whether BNB, Binance’s native coin, is a commodity given that the business has claimed it is a security.