US District Judge for Columbia Amy Berman Jackson gave Binance’s US entity to invest certain customers’ fiat funds into US treasury bills, which mature over four weeks. Binance must custody the fiat funds it wishes to invest in treasury bills with BitGo and maintain enough funds to honor customer withdrawals always.
The court filing read, “Pending before the Court is BAM Trading Services Inc. and BAM Management US Holdings Inc.’s (together, “BAM”) Motion for Relief from the Consent Order (Dkt. No. 71) to (1) engage third-party investment advisors to invest BAM’s corporate assets; (2) invest certain customer assets in United States Treasury Bills; and (3) transfer crypto assets to a non-affiliated third-party custodian or custodians. Upon due consideration of the Motion, the Court concludes that the Motion should be granted.”
Binance can also invest its corporate crypto assets through third-party investment advisors and managers that are not controlled or owned by the exchange in any way. Moreover, it must ensure that investment managers do not reinvest the crypto into Binance and affiliated companies. Binance must use a third-party custodian to store crypto assets under management (AUM) to safeguard client assets and interests.
Furthermore, Binance must share responsibility for asset transfers and withdrawals with the custodian, preventing the exchange from maintaining full custody of client assets. Also, Binance employees handling the keys to the wallets holding user funds must be situated in the US.
This order, coming from Judge Jackson, continues a string of previous ones she issued regarding the exchange’s affairs. Recently, she also concluded that BNB was not a security when sold on secondary markets—an allegation made by the US Securities and Exchange Commission (SEC).
The same suit the accusation was a part of included others. The SEC has accused Binance of offering an illegal investment contract through its staking program, violating securities laws by selling BNB tokens during an ICO, and failing to register under the Exchange Act. Judge Jackson will hear those claims in subsequent trials.
