In a recent legal development, a US court has granted Binance US permission to invest certain customer fiat funds that are currently held at BitGo. The exchange requested court approval to invest approximately $40 million in US Treasury Bills, in $10 million increments over the course of four weeks. These investments will be done through a trading account on TreasuryDirect, with the Treasury bills maturing on a rolling four-week basis. This move opens up new opportunities for Binance US to grow its assets and provide more investment options for its customers.
Judge Amy Berman Jackson approved the exchange’s request to invest its customer fiat funds under certain conditions. One of the primary conditions is that the exchange must maintain enough funds on its platform to cover all expected customer withdrawal requests. Furthermore, Binance US must update its terms of use to inform customers about the investment of their funds in US Treasury Bills. The judge also granted additional requests to the exchange, including authorization to engage third-party investment advisors to manage its corporate assets and to transfer custodied assets to a non-affiliated third-party custodian in the United States.
As part of the approval, the Judge emphasized the importance of security and compliance in managing the funds. The exchange must ensure that the new private and administrative keys for the wallets holding customer funds are controlled solely by its employees in the United States or the third-party custodian. Additionally, Binance US is required to conduct reasonable diligence to ensure that the advisors managing its assets are not affiliated with Binance Entities to maintain independence and transparency in the investment process.
Binance US, as a subsidiary of the global Binance exchange, is currently facing legal challenges from the US Securities and Exchange Commission (SEC). In a separate incident, the international Binance exchange assisted the US Federal Bureau of Investigations (FBI) San Diego in investigating a pig butchering scam that recovered $2.5 million in USDT. Pig-butchering schemes are fraudulent activities where scammers use deceptive tactics to lure victims into investing in fake crypto schemes, resulting in significant financial and emotional harm. The US Department of Justice has noted an increase in these types of scams, with over $2 billion stolen through such schemes in 2022.
The court’s approval for Binance US to invest customer funds in US Treasury Bills provides new opportunities for the exchange to grow its asset base. However, it is crucial for Binance US to uphold security measures, compliance with regulations, and transparency in its investment activities to protect customer funds and maintain trust in the market. The legal battles and investigations surrounding the exchange highlight the importance of vigilance and due diligence in the cryptocurrency industry to combat fraudulent activities and protect investors.
