A recent development in the case of Binance US has seen a US court granting permission for the exchange to invest certain customer fiat funds. This decision allows Binance US to invest these funds, which are currently held at BitGo, in US Treasury Bills. The court approved the exchange’s request to invest approximately $40 million in $10 million increments over the span of four weeks. These investments will be carried out through a trading account on TreasuryDirect and will involve US Treasury bills that mature on a rolling four-week basis.
Judge Amy Berman Jackson, who presided over the case, laid out certain conditions that Binance US must adhere to in order to proceed with the investment. One key condition is that the exchange must ensure it maintains sufficient funds on its platform to accommodate all anticipated customer withdrawal requests. Additionally, Binance US must update its terms of use to inform customers of the investment decision and the associated risks. The judge also granted the exchange other requests, such as allowing it to engage third-party investment advisors to manage its corporate assets and transfer its custodied assets to a non-affiliated third-party custodian based in the United States.
Legal Battle and Investigations
Binance US, a subsidiary of the global Binance exchange, is currently involved in a legal dispute with the US Securities and Exchange Commission (SEC). This ongoing legal battle has added another layer of complexity to the investment approval process. In a separate incident, the international Binance exchange assisted the US Federal Bureau of Investigations (FBI) San Diego in uncovering a pig butchering scam that resulted in the recovery of $2.5 million in USDT.
Pig butchering scams are a form of fraudulent activity where perpetrators use various deceptive tactics to gain the trust of victims online. Once trust is established, victims are enticed to invest in a cryptocurrency scheme that turns out to be fraudulent. In many cases, the scammer convinces victims to make additional payments, leading to significant financial and emotional distress when the fraud comes to light. According to the US Department of Justice, these types of scams have become increasingly common, with over $2 billion being stolen through similar schemes in 2022.
The investment approval granted to Binance US represents a significant development in the legal landscape surrounding the exchange. As the legal battle with the SEC continues, it is crucial for Binance US to comply with the conditions set forth by the court to ensure the proper management and protection of customer funds. The involvement of Binance in uncovering fraudulent schemes like the pig butchering scam underscores the importance of vigilance and due diligence in the cryptocurrency industry.
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