What does it mean for Binance subsidiary BAM to receive court approval to allow customers to invest legal funds in U.S. Treasury bonds?

Binance’s legal dispute with US regulators seems never-ending. Although a hefty $4.3 billion fine has been paid, this is in conjunction with the U.S. Department of Justice (DOJ), the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), the Internal Revenue Service (IRS), and the Commodity Futures Trading Commission (CFTC). of reconciliation. The U.S. Securities and Exchange Commission (SEC) is still going on.

Regarding yesterday’s court order document regarding Binance (BAM), Aiying has sorted it out for everyone: Since the case prosecuted by the SEC was heard in the U.S. District Court for the District of Columbia, the document released yesterday was filed by the U.S. District Court for the District of Columbia. A court order from the court does not mean the end of the case, but is just to ensure that Binance can operate normally during the trial of the case and avoid having a great impact on customers and the market. This is indeed true in Aiying’s view. More humane. The main content of the document roughly says: "Although I am suing you, you can still do the following three aspects during the period:

Authorized investment in company assets: BAM Company can give its own money to other companies or investment consultants for investment. As long as these companies are not affiliated with Binance, BAM needs to ensure that the money will not be invested in Binance-related companies

Invest customer legal currency funds: BAM will invest some of the customer legal currency funds currently hosted on BitGo into U.S. Treasury bonds. , but only for 4-cycle short-term Treasury bonds (28 days) issued by the U.S. Treasury. The premise for this is that Binance cannot be involved in the investment process, and BAM must ensure that there is enough money for customers to withdraw at any time

.

Custodian Cryptocurrency: BAM may escrow assets in and transfer to wallets provided by unaffiliated third-party custodians in the United States, provided that control of customer assets and new private keys for these wallets must be provided by BAM Trading employees or third parties located in the United States The custodian controls that all transfers and withdrawals require approval by BAM Trading and the third-party custodian when necessary. Binance entities cannot have control over the assets in these wallets.

Supplementary background information

1. The main parties involved in the litigation. Includes:

Binance Holdings Limited: This is a limited liability company registered in the Cayman Islands, founded and owned by Changpeng Zhao, which has been operating the Binance.com platform, an international crypto asset exchange, since July 2017. Platform.

BAM Trading Services Inc.: This is a company registered in Delaware and the operating entity of Binance.US. It is headquartered in Miami, Florida and is a wholly-owned subsidiary of BAM Trading. 43 jurisdictions in the United States hold MTL (MoneyTransmitter Licensing) licenses

BAM Management US Holdings Inc.: This is a company registered in Delaware and is the parent company of BAM Trading and other related entities. When the US platform was launched in 2019, BAM Management was wholly-owned by BAM Management Company Limited, a company in the Cayman Islands, which in turn was wholly-owned by CPZ Holdings Limited, a company A company in the British Virgin Islands, owned and controlled by Changpeng Zhao

2. Review of the U.S. Securities and Exchange Commission’s (SEC) litigation process against Binance

2022: Preliminary investigation and warning

SEC began to prosecute Binance in 2022 Conduct a preliminary investigation. Although the specific details have not been fully disclosed, the main issues of concern to the SEC include whether Binance violated U.S. securities laws, especially by providing securities trading services without registration.

June 2023: SEC officially filed a lawsuit

In June 2023, the SEC officially filed a lawsuit against Binance and its founder Changpeng Zhao. The SEC accused Binance and its related companies of violating securities laws, mainly including failing to register as a stock exchange and securities broker, violating anti-money laundering regulations, etc.

The lawsuit also includes the classification of certain crypto assets on the Binance platform, such as Binance Coin (BNB), as securities and requires Binance to stop the trading and sale of these securities.

July 2023: Reaction & Response

Binance and Changpeng Zhao responded to the SEC’s lawsuit, denying all allegations and claiming that the SEC’s lawsuit lacked legal basis. It also stated that Binance is always committed to complying with all relevant laws and regulations and has taken measures to improve compliance.

September 2023: Preliminary Ruling and Arbitration

During the litigation process, the court ruled on some preliminary issues, including whether the SEC is allowed to freeze Binance’s assets and whether Binance is required to provide more documents. At the same time, the two parties entered the stage of partial settlement and arbitration to discuss possible settlement plans or specific solutions to the case.

2024: Case Progress

As of 2024, the case is still ongoing. Depending on the complexity of the case and the requirements of the legal process, the case may undergo further hearings, the presentation of evidence, and possible settlement or judgment.

This is the ins and outs of the whole case. Yesterday when the document came out, everyone was more excited about it on WeChat Moments - Binance was allowed to invest customer funds in U.S. Treasury bonds. To be honest, I didn’t get the excitement about this. The document emphasized that the investment objects clearly mentioned in the document are limited to customers' legal currency funds, not virtual currency assets. And if it is only legal currency, and it is only for some customers, it is only to ensure that the customer's legal currency funds can be safely and effectively managed during the litigation, and at the same time meet the customer's withdrawal needs, and there is no need to over-interpret it.

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