U.S. District Judge Amy Berman Jackson has ordered the two entities to work towards a compromise.
Binance.US and the United States Securities and Exchange Commission (SEC) have agreed to work on an arrangement that will allow the exchange to avoid freezing all of its assets.
On June 14, Bloomberg reported U.S. District Judge Amy Berman Jackson referred the two organizations to a magistrate judge to work towards a compromise arrangement that can protect customer funds without having to shut down the exchange.
“Shutting it down completely would create significant consequences not only for the company but for the digital asset markets in general,” Jackson said at a June 13 hearing.
Judge Jackson noted she wouldn’t come to a final decision on the SEC’s motion for a temporary restraining order until the two parties had worked through the situation with the magistrate.
An update on the negotiations made with the magistrate has been scheduled for the end of business hours on June 15.
Additionally, she noted the SEC and Binance.US seemed “not that far apart” when it came to reaching an agreement on the matter.
Before Judge Jackson reached her decision at the hearing, former SEC enforcement attorney John Read Stark informed his 20,000 Twitter followers that there is “a lot of conflict between what each party” wanted to get out of the hearing.
SEC/Binance Newsflash: Dueling Consent Orders (Read Them Now)
— John Reed Stark (@JohnReedStark) June 13, 2023
The SEC and the Binance defendants have each submitted draft orders of what each party wants the Judge to order in the SEC/Binance Emergency Asset Freeze Enforcement Action.
There is obviously a lot of conflict… pic.twitter.com/UWjXSgL5lR
“That does not mean the judge cannot order a compromise and find common ground,” Stark explained.
Related: SEC can’t find Binance CEO Changpeng Zhao, asks court for ‘alternative service’
The SEC filed an emergency motion for a temporary restraining order on Binance.US on June 6, after accusing Binance CEO Changpeng Zhao (CZ) of being able to access Binance.US customer funds.
The regulator alleged Zhao moved $12 billion of Binance’s funds through an entity he controlled called Merit Peak.
In a June 12 joint memorandum submitted ahead of the hearing on the restraining order, both Binance.US and Zhao denied the claims that funds were ever mishandled. They accused the SEC of being “unable to identify a single instance” in which Binance.US customer funds were ever misused.
“Indeed, there is no ‘emergency’ here at all, other than the one manufactured by the SEC for its own purposes.”
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