Binance US Granted Approval to Invest Customer Funds

On July 19, Binance.US was given the green light by a court to invest customer fiat funds in US Treasury Bills. Judge Amy Berman Jackson's decision permits these investments under strict rules to ensure responsible and transparent management. A third party will handle these investments to boost transparency.

The court order allows Binance.US to invest around $40 million in Treasury Bills, with $10 million invested each week over four weeks via a TreasuryDirect account. The funds, currently held at BitGo, must be transferred to an independent third-party custodian in the US. Only Binance.US employees in the US, or a third-party custodian, will control the private and administrative keys for these wallets.

The court emphasized the need for transparency in Binance.US’s investment activities. The exchange must provide detailed monthly reports on the costs related to maintaining these Treasury investments. This requirement ensures that the management of customer funds is clear and accountable.

Binance.US must also keep enough USD on hand to meet potential customer withdrawal requests, based on past withdrawal activity. This rule ensures that the exchange can quickly handle customer withdrawal needs, boosting trust in the platform. Additionally, Binance.US is required to perform thorough checks to confirm that advisors managing its assets are not related to Binance. This due diligence prevents conflicts of interest and guarantees that customer funds are managed with high integrity.

This court approval follows a June decision where a federal judge dismissed part of the US SEC's lawsuit against Binance and its founder, Changpeng Zhao. However, other charges, including those against Binance.US’s holding company, were allowed to proceed. These charges involve the initial coin offering (ICO), ongoing sales of BNB, BNB Vault, staking services, and allegations of fraud and failing to register. Charges related to secondary BNB sales and Simple Earn were dismissed.

The court's decision aims to enhance the security of customer funds by setting strict conditions and involving a third party in managing investments. Monthly reports add an extra layer of accountability. Requiring Binance.US to maintain enough USD to cover withdrawal requests ensures that customer needs are met promptly, increasing confidence in the platform.

In summary, the court's approval for Binance.US to invest in US Treasury Bills is a significant move to boost the security and transparency of customer fund management. These strict conditions ensure responsible investments and prevent conflicts of interest. This decision comes amid ongoing regulatory scrutiny following a federal judge's partial dismissal of the SEC's lawsuit against Binance.