Court Approval and Investment Plans
Binance.US has recently received permission from a US court to invest $40 million in US Treasury bills. These funds are currently held at BitGo and will be invested in $10 million increments over four weeks. The investments will be made through a trading account on TreasuryDirect and will mature on a rolling four-week basis.
Earlier this week, Binance.US requested this approval, and on July 19, Judge Amy Berman Jackson granted it. The judge’s approval allows Binance.US to invest customer fiat funds, as long as they keep enough money on their platform to meet all customer withdrawal requests. Binance.US must also update its terms of use to inform customers about these changes.
Additional Court Requests
In addition to approving the investment in US Treasury bills, Judge Jackson granted other requests from Binance.US. One important approval is the authorization for Binance.US to hire third-party investment advisors to manage its corporate assets. This means that Binance.US can work with financial experts who are not affiliated with Binance Entities to handle their money.
Another approval allows Binance.US to transfer its custodied assets to a non-affiliated third-party custodian in the United States. However, the judge emphasized that the new private and administrative keys for these wallets must be maintained and directed solely by Binance.US employees or the third-party custodian, all of whom must be located in the United States.
Judge Jackson also ordered Binance.US to ensure that the advisors managing their assets do not qualify as Binance Entities. This measure aims to maintain independence and avoid conflicts of interest in managing these funds.
Ongoing Legal Battle with the SEC
Binance.US, a subsidiary of the global Binance exchange, is currently involved in a legal battle with the US Securities and Exchange Commission (SEC). The SEC has raised concerns about Binance.US’s operations and regulatory compliance.
Despite these legal challenges, Binance.US continues to move forward with its plans to manage customer funds and corporate assets more effectively. The recent court rulings provide Binance.US with the flexibility needed to make these financial decisions while staying within the boundaries of regulatory requirements.
Recovery from Pig Butchering Scam
In a separate development, the international Binance exchange has been working with the US Federal Bureau of Investigations (FBI) in San Diego to investigate a pig butchering scam. This scam led to the recovery of $2.5 million in USDT (Tether).
Pig butchering scams are fraud schemes where scammers use manipulative tactics to gain victims’ trust online. Once trust is established, the victims are tricked into investing in a fake crypto scheme. The scammers often persuade the victims to make additional payments before they realize the fraud. The “butchering” happens when the scammer steals the victim’s assets, causing severe financial and emotional harm.
According to the US Department of Justice, these types of scams have become more common, with over $2 billion stolen through such schemes in 2022. Binance’s cooperation with the FBI highlights their commitment to fighting fraud and protecting their customers.
Specifics of the Court Ruling
In a recent decision by the United States District Court for the District of Columbia, BAM Trading Services Inc. and BAM Management US Holdings Inc. (collectively known as “BAM”) have been granted relief from certain provisions of a prior consent order in the case against Binance Holdings Limited and others.
This court order allows BAM to:
- Engage third-party investment advisors to manage its corporate assets, provided these advisors are not affiliated with Binance Entities.
- Invest certain customer funds in United States Treasury Bills, ensuring enough USD availability to meet customer withdrawal demands.
- Transfer and custody crypto assets with non-affiliated third-party custodians in the United States, ensuring that Binance Entities do not control these assets.
These rulings enable BAM to manage its assets and customer funds with greater flexibility while maintaining compliance with regulatory requirements.
Impact on Binance.US Investment Strategy
The court’s approval for Binance.US to invest in US Treasury bills marks a significant step in their investment strategy. By investing in Treasury bills, Binance.US can secure a low-risk investment that provides steady returns. This move aims to ensure that the exchange maintains sufficient liquidity to meet customer demands and strengthen its financial stability.
The approval to work with third-party investment advisors and custodians also helps Binance.US diversify its asset management strategies. These measures are crucial for building trust with customers and regulatory bodies, demonstrating Binance.US’s commitment to transparency and sound financial practices.
Compliance and Customer Assurance
Binance.US’s actions to comply with the court’s orders show their dedication to maintaining customer trust and regulatory compliance. By ensuring that customer funds are invested wisely and safely, Binance.US aims to reassure customers that their assets are secure.
Updating the terms of use to notify customers about these investment strategies is another step toward transparency. Customers need to be aware of how their funds are being managed and the measures Binance.US is taking to protect their investments.
Conclusion
The court’s approval for Binance.US to invest $40 million in US Treasury bills is a significant development for the exchange. It provides Binance.US with the opportunity to manage customer funds more effectively while ensuring liquidity and compliance with regulatory requirements. Additionally, the approvals to hire third-party advisors and use non-affiliated custodians further strengthen their financial management strategies.
Binance.US’s ongoing legal battle with the SEC continues to be a challenge, but the recent court rulings provide a pathway for more flexible and secure asset management. Meanwhile, the international Binance exchange’s efforts to combat scams highlight their commitment to customer protection.
Overall, these developments reflect Binance.US’s efforts to enhance their investment strategies, comply with regulations, and build trust with their customers.
