CONSENT ORDER, entered pursuant to the parties' stipulation [70], governing the conduct of the parties pending the resolution of this case on the merits. See order for details. Signed by Judge Amy Berman Jackson on 6/17/23. (DMK)
Page 1 UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
SECURITIES AND EXHANGE
)
COMMISSION,
)
)
Plaintiff,
)
)
v.
)
Civil Action No. 23-1599 (ABJ)
)
BINANCE HOLDINGS LIMITED, et al., )
)
Defendants.
)
____________________________________)
CONSENT ORDER
Pursuant to the stipulation of the parties [Dkt. # 70] jointly proposing the terms of a consent
decree governing the conduct of the parties pending the resolution of this case on the merits, and
subject to the protective order to be entered in this case, it is hereby ORDERED:
I.
On or before the date the Court issues this Consent Order, the Stipulating Defendants shall
repatriate to the United States, transfer to BAM Trading, and confirm that BAM Trading maintains
possession, custody and control in the United States of all fiat currency and crypto assets that are
deposited, held, traded, or accrued by customers, including affiliated and non- affiliated liquidity
providers (hereinafter referred to as “Customers”) on the crypto trading platform commonly known
as “Binance.US” or otherwise held for the benefit of BAM Trading or BAM Management
Customers, including, but not limited to, those assets associated with BAM Trading’s staking-asa-service program, “Private and Administrative Keys,” (which are defined as such keys and any
portion or copy thereof, any devices, hardware, and/or software managing such keys and any
portion or copy thereof), the ledger device described in the SEC’s memorandum of lawPage 2 [Dkt. # 8-2], and the root access associated with the Amazon Web Services account(s) for the
Binance.US Platform), and any hardware crypto asset wallets (hereinafter referred to as “Customer
Fiat Assets” or “Customer Crypto Assets” and, collectively, “Customer Assets”), except as
otherwise specified in this Consent Order. The term “Customer Assets” includes any New Private
and Administrative Keys as defined in II.2 of this Consent Order. For the avoidance of doubt, U.S.based personnel for BAM Trading and BAM Management will have complete control over
Customer Fiat Assets and Customer Crypto Assets, including assets associated with BAM
Trading’s staking-as-a-service program, all Private and Administrative Keys and New Private and
Administrative Keys, that control any wallets, staking operations, and/or any withdrawals,
transfers, or movement of assets, except as otherwise specified in this Consent Order. Nothing in
this paragraph will prevent BAM Trading from relying on non-affiliated third-party custodians
located within the United States to provide custody and related services.
II.
IT IS FURTHER ORDERED that on or before the date the Court issues this Consent
Order, Stipulating Defendants will, through their officers and employees or a non-affiliated third
party custodian within the United States, ensure, and each confirm to counsel of record for the
SEC, that BAM Trading and BAM Management obtain and maintain sole possession, custody,
and control of all Customer Assets and can transfer them solely for purposes set forth in this
Consent Order, and subject to the other provisions of this Consent Order, and all transfers and
withdrawals of Customer Assets will solely be under the direction and control of BAM Trading
and BAM Management, through officers and employees located in the United States, or a nonaffiliated third party custodian located in the United States; Page 3 1.
IT IS FURTHER ORDERED that BAM Trading and BAM Management will not
provide possession, custody, or control over Customer Assets to any individual or entity, including
Binance, Zhao, and, with the exception of BAM Trading and BAM Management, any individual or
entity with any affiliation, agreement, or other relationship with Binance, Zhao, or any Zhao- owned
or -controlled entity (these individuals and entities collectively, “Binance Entities”). BAM
Trading and BAM Management, including their officers and employees, will remove and not
designate any of the Binance Entities as an administrator, account holder or signatory of, or
otherwise having any authority to transfer or withdraw from, any account or wallet holding
Customer Assets, without first obtaining leave of the Court. Further, Stipulating Defendants
including their employees or agents, will delete or destroy, and will ensure the Binance Entities
delete or destroy, any existing copies of Private and Administrative Keys and/or effect the
immediate dissolution of any existing formal or informal agreements (whether written or verbal)
for the control, exercise of control, or transfer of Private and Administrative Keys or Customer
Assets, that would facilitate or permit any transactions or actions contrary to this Consent Order’s
requirement that Customer Assets be held solely by BAM Trading and BAM Management in the
United States and may be transferred solely for the purposes set forth in this Consent Order. This
paragraph does not limit BAM Trading’s ability to provide customers other than the Binance
Entities with possession, custody, or control over their own Customer Assets or rely on nonaffiliated third-party custodians in the United States to provide custody and related services for
Customer Assets.
2.
IT IS FURTHER ORDERED that within 14 days of entry of the Consent Order,
BAM Trading and BAM Management will begin to establish new wallets, and Stipulating
Defendants will begin to transfer all Customer Crypto Assets to the new wallets with new private Page 4 and administrative keys. These “New Private and Administrative Keys” (which are defined as such
keys and any portion or copy thereof, any devices and/or software managing such keys, and any
portion or copy thereof for the new wallets) will be in the sole possession, custody, and control of
BAM Trading officers and employees who are located in the United States. These New Private
and Administrative Keys, will not be provided to or in any way shared with the Binance Entities.
BAM Trading shall confer with counsel of record for the SEC regarding a reasonable timeline for
completing this work and will provide them with the addresses for all new wallets holding
Customer Assets, both hot and cold, and will identify the specific crypto asset(s) held within each
wallet.
3.
IT IS FURTHER ORDERED that for the pendency of this litigation Defendants
BAM Management and BAM Trading may dispose, transfer, pledge, encumber, or assign assets
presently owned by BAM Management or BAM Trading, in whatever form such assets may exist
and wherever located, solely to make payments for expenses or to satisfy obligations incurred in
the ordinary course of business as set forth in Docket # 62 (“BAM Ordinary Course Business
Expenses”) and for no other purpose. BAM Trading and BAM Management may not in any
circumstance make payments, incur any new obligations, or transfer any assets, to or for the benefit
of any of the Binance Entities or any individual or entity acting on behalf or for the benefit of any
such Binance Entity.
4.
IT IS FURTHER ORDERED that, during the pendency of this action, BAM
Trading and BAM Management shall provide, subject to a protective order entered in this case,
the SEC’s counsel of record with a copy of its monthly report of BAM Ordinary Course Business
Expenses (substantially in the form set forth in Exhibit A in the mediation) that include the total
amount spent, a breakdown of the amounts in each category and subcategory enumerated in Page 5 Exhibit A, and any amounts aggregating in excess of $150,000 to foreign payees. The SEC may
seek further information from BAM Management and BAM Trading concerning the monthly
BAM Ordinary Course Business Expenses information as set forth in Exhibit A.
5.
IT IS FURTHER ORDERED that within 14 days of entry of the Consent Order,
Stipulating Defendants will ensure that “Private and Administrative Keys,” as defined in Section I
(page 2) of this Consent Order, and, upon creation, New Private and Administrative Keys, will be
in the sole possession, custody, and control of BAM Trading officers and employees who are
located in the United States, or by non-affiliated third-party custodians in the United States under
the direction and control of BAM Management and BAM Trading officers and employees located
in the United States. The Private and Administrative Keys and New Private and Administrative
Keys, will not be provided to or in any way shared with the Binance Entities. BAM Trading will
keep current its list of hot and cold wallets and make that list available to counsel of record for the
SEC upon request.
6.
IT IS FURTHER ORDERED that BAM Trading may continue to transfer
Customer Assets to external wallets or accounts solely at the direction of the beneficial owners of
such Customer Assets or to support redemptions or transfers directed by such customers subject
to the prohibition above that BAM Trading and BAM Management, including their officers and
employees, may not in any circumstance transfer Customer Assets to or for the benefit of any of
the Binance Entities. Notwithstanding the foregoing and subject to BAM Trading’s inclusion of
the details of any such redemptions in or alongside its monthly report of BAM Ordinary Course
Business Expenses and subject to a protective order entered in this case, BAM Trading may support
redemptions of Customer Assets belonging personally to U.S.-based employees of Binance
Entities. Page 6 7.
IT IS FURTHER ORDERED that BAM Trading may transfer custody of
Customer Crypto Assets deposited, held, traded, staked, or accrued through BAM Trading’s
staking-as-a-service program (“Staking Assets”) to custodians BitGO or Aegis provided the
following criteria are met:
a. the control of Staking Assets in these wallets, including, but not limited to,
Private and Administrative Keys and New Private and Administrative Keys, are
maintained and directed solely by BAM Trading officers and employees located
in the United States or by BitGO and Aegis;
b. if BAM Trading holds the Private and Administrative Keys or New Private and
Administrative Keys for these wallets, custody and control of these keys is held
in the United States by BAM Trading personnel located in the United States; and
c. all transfers and withdrawals require the approval of both BAM Trading and, as
necessary, BitGO and Aegis.
d. The Binance Entities shall not have possession, custody, or control of these
Staking Assets, including, but not limited to, any authority, formally or
informally, directly or indirectly, to control, transfer, or withdraw, these Staking
Assets.
III.
IT IS FURTHER ORDERED that Stipulating Defendants, their directors, officers,
agents, servants, employees, attorneys, depositories, banks, and those persons in active concert or
participation with any one or more of them, and each of them, be and they hereby are restrained
and enjoined from, directly or indirectly, destroying, mutilating, concealing, altering, disposing of,
or otherwise rendering illegible in any manner, any of the books, records, documents, Page 7 correspondence, brochures, manuals, papers, ledgers, accounts, statements, obligations, files and
other property of or pertaining to Stipulating Defendants relevant to the subject matter of this
action, wherever located and in whatever form, electronic or otherwise, until further Order of this
Court or as required in Section II.1.
IV.
IT IS FURTHER ORDERED that, on or before 20 days from the date the Court enters
this Consent Order, the Stipulating Defendants, to the best of their knowledge and ability, provide
counsel for the SEC with a preliminary list of:
1. accounts and wallets holding Customer Fiat, Customer Crypto Assets, and funds or
assets of either BAM entity, and the value of the Customer Fiat, Customer Crypto
Assets, and funds or assets held; and
2. customers of the Binance.US trading platforms and related services, and the balance
of Customer Assets associated with each customer’s Binance.US account and/or
Binance.US wallet.
IT IS FURTHER ORDERED that, on or before 20 days from the date the Court enters
this Consent Order, Binance will provide counsel for the SEC with details about the users on the
Binance.com platform previously reflected in the aggregate U.S. KYC and potential U.S. nonKYC trading datasets produced to the SEC on December 6, 2021 and August 18, 2022 reflecting
U.S. KYC users who engaged in transactions on Binance.com beginning on June 1, 2019 and
ending in September 2021 and potential U.S. non-KYC users who engaged in transactions on
Binance.com beginning on June 1, 2019 and ending on January 19, 2022. To the extent such users
remain on the Binance.com platform, Binance will provide counsel for the SEC with details of their
restricted account balances. Page 8 IT IS FURTHER ORDERED that, on or before 45 days from the date the Court issues
this Consent Order, each of the Stipulating Defendants shall serve upon the Commission a verified
written accounting, which the Stipulating Defendants must sign, including through an officer for
each entity authorized to sign on behalf of and bind the entity Defendants, under penalty of perjury,
providing the following information;
1.
Each account or wallet holding Customer Assets or assets of either BAM
Management or BAM Trading (“BAM Entity”), regardless of the account or wallet holder or
signatory, and/or maintained in any BAM Entity’s name, held by any BAM Entity or for any BAM
Entity’s direct or indirect beneficial interest, or over which any BAM Entity exercised any direct
or indirect control from December 1, 2022, through the date of the accounting, including the name
of the financial institution, exchange, or other entity or individual holding such account or wallet,
name and the account number, and the wallet address; and
2.
All assets, funds, crypto assets, securities, or other property, real or personal, within
each BAM Entity’s possession, custody, or control, that is valued greater than $1,000, that was
transferred to or for the benefit of any Defendant or any Binance Entity from December 1, 2022, to
the date of the accounting, including a description of each transfer and what was transferred, the
value of the transfer, the name of the recipient, the date of the transfer, and the reason for the
transfer;
V.
IT IS FURTHER ORDERED THAT, commencing with the time and date of this Order,
in lieu of the time periods and notice provisions of Rules 26, 30, 33, 34, 36 and 45 of the Federal
Rules of Civil Procedure, discovery shall proceed as follows, subject to a protective order entered
in this case: Page 9 1.
For the next 90 days, the SEC may conduct expedited discovery of the Stipulating
Defendants (including their personnel) and of the BAM Entities’ third-party auditors and
custodians of assets concerning Customer Assets and their possession, custody, control, transfer or
movement, security, segregation, availability, and any encumbrances or limitations that would
make them unavailable for transfer or withdrawal by customers, including, but not limited to type,
identity, location, value, custody, control, restrictions, and whether there are sufficient assets to
satisfy customer liabilities or meet customer claims for Customer Assets held on their behalf. Such
expedited discovery shall not commence against Binance, Binance personnel, and Zhao for days. This limited expedited discovery pertaining to the Customer Assets shall not be counted
against any discovery limits imposed under the Federal Rules of Civil Procedure;
2.
Pursuant to Rule 30(a) of the Federal Rules of Civil Procedure and to the time
periods set forth in paragraph 1 above, the SEC may take depositions of the Stipulating Defendants
(including their personnel) and of the BAM Entities’ third-party auditors and custodians of assets
who are involved in or otherwise knowledgeable about asset clearing, custody, and control, and
software development and operational tasks associated with asset clearing, custody, and control,
regarding the Customer Assets, and their possession, custody, control, transfer, movement,
security, segregation, availability, and any encumbrances or limitations that would make them
unavailable for transfer or withdrawal by customers, including, but not limited to type, identity,
location, value, custody, control, restrictions, and whether there are sufficient assets to satisfy
customer liabilities or meet customer claims for Customer Assets held on their behalf upon oral
examination on 10 calendar days’ notice of any such deposition. As to such personnel, the SEC
may depose such witnesses after serving a deposition notice by email, hand, or overnight courier
upon such individuals, and without serving a subpoena on such witness. If the Stipulating Parties Page 10 agree to conduct any depositions virtually, and the oath of the deponent may be administered
remotely by the court reporter, through audio-video means, and this oath shall have the same effect
as if given in the physical presence of the deponent. Subject to compliance with all laws,
depositions of persons located outside the United States shall presumptively be conducted
remotely, provided such persons are located in, or will travel to, a location where voluntary
depositions and testimony under penalty of perjury pursuant to the Federal Rules of Civil
Procedure are permitted;
3.
Pursuant to Rule 33(a) of the Federal Rules of Civil Procedure and to the time
periods set forth in paragraph 1 above, the Stipulating Defendants shall answer any interrogatories
served by the SEC regarding Customer Assets and their possession, custody, control, transfer,
movement, security, segregation, availability, and any encumbrances or limitations that would
make them unavailable for transfer or withdrawal by customers, including, but not limited to type,
identity, location, value, custody, control, restrictions, and whether there are sufficient assets to
satisfy customer liabilities or meet customer claims for Customer Assets held on their behalf, within
20 calendar days of service of such interrogatories;
4.
Pursuant to Rule 34(b) of the Federal Rules of Civil Procedure and to the time
periods set forth in paragraph 1 above, the Stipulating Defendants shall produce all documents
requested by the SEC regarding the Customer Assets and their possession, custody, control,
transfer, movement, security, segregation, availability, and any encumbrances or limitations that
would make them unavailable for transfer or withdrawal by customers, including, but not limited to
type, identity, location, value, custody, control, restrictions, and whether there are sufficient assets
to satisfy customer liabilities or meet customer claims for Customer Assets held on their behalf
within 10 calendar days of service of such request, with production of the documents made to Page 11 counsel of record for the SEC or such other person or place as counsel for the SEC may direct in
writing; and
5.
All written responses to the SEC’s requests for discovery under the Federal Rules
of Civil Procedure shall be delivered electronically, or such other place and person as counsel for
the SEC may direct in writing.
VI.
IT IS FURTHER ORDERED THAT for purposes of this action only Stipulating
Defendants have agreed to waive service of the Summons and Complaint pursuant to Federal Rule
of Civil Procedure 4(d) and to accept service through counsel of record of any further filing or other
process in this case.
VII.
IT IS FURTHER ORDERED THAT nothing in this Consent Order shall otherwise alter
the rights, obligations, or duties of the Stipulating Defendants or the SEC. Nothing in this Consent
Order shall be construed as affecting any party’s rights to assert any claims or defenses, to constitute
a waiver of any party’s right to a trial by jury, as precluding the parties from objecting to the scope
or nature of any discovery sought, or seeking to modify, on consent or by order of the Court, any of
the deadlines or orders set forth in this Order. Further, nothing in this Order shall be construed as
an explicit or implicit agreement or endorsement by the Commission that the business of BAM
Management and BAM Trading may continue or is otherwise lawful, nor as a concession by the
Stipulating Defendants that their actions were in any way improper or unlawful.
VIII.
IT IS FURTHER ORDERED THAT this Court shall retain jurisdiction over the
Stipulating Defendants in order to modify, impose, implement, carry out, and enforce the terms of
this Consent Order. Page 12 IX.
The Stipulating Parties retain the right to seek additional relief, or relief from this Consent
Order, as available under the Federal Rules of Civil Procedure and applicable law, including but
not limited to Binance’s and Zhao’s ability to contest jurisdiction other than jurisdiction to impose,
implement, carry out, and enforce this Consent Order.
X.
IT IS FURTHER ORDERED THAT this Order binds the following who receive actual
notice of this Stipulation and Consent Order by personal service or otherwise: (a) each Stipulating
Defendant’s officers, agents, servants, employees, and attorneys; (b) other persons in active
concert or participation with Stipulating Defendants or with anyone described in (a).
SO ORDERED.
AMY BERMAN JACKSON
United States District Judge
DATE: June 17,
PDF Page 1
PlainSite Cover Page
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Case 1:23-cv-01599-ABJ Document 71 Filed 06/17/23 Page 1 of 12
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
SECURITIES AND EXHANGE
)
COMMISSION,
)
)
Plaintiff,
)
)
v.
)
Civil Action No. 23-1599 (ABJ)
)
BINANCE HOLDINGS LIMITED, et al., )
)
Defendants.
)
____________________________________)
CONSENT ORDER
Pursuant to the stipulation of the parties [Dkt. # 70] jointly proposing the terms of a consent
decree governing the conduct of the parties pending the resolution of this case on the merits, and
subject to the protective order to be entered in this case, it is hereby ORDERED:
I.
On or before the date the Court issues this Consent Order, the Stipulating Defendants shall
repatriate to the United States, transfer to BAM Trading, and confirm that BAM Trading maintains
possession, custody and control in the United States of all fiat currency and crypto assets that are
deposited, held, traded, or accrued by customers, including affiliated and non- affiliated liquidity
providers (hereinafter referred to as “Customers”) on the crypto trading platform commonly known
as “Binance.US” or otherwise held for the benefit of BAM Trading or BAM Management
Customers, including, but not limited to, those assets associated with BAM Trading’s staking-asa-service program, “Private and Administrative Keys,” (which are defined as such keys and any
portion or copy thereof, any devices, hardware, and/or software managing such keys and any
portion or copy thereof), the ledger device described in the SEC’s memorandum of law
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Case 1:23-cv-01599-ABJ Document 71 Filed 06/17/23 Page 2 of 12
[Dkt. # 8-2], and the root access associated with the Amazon Web Services account(s) for the
Binance.US Platform), and any hardware crypto asset wallets (hereinafter referred to as “Customer
Fiat Assets” or “Customer Crypto Assets” and, collectively, “Customer Assets”), except as
otherwise specified in this Consent Order. The term “Customer Assets” includes any New Private
and Administrative Keys as defined in II.2 of this Consent Order. For the avoidance of doubt, U.S.based personnel for BAM Trading and BAM Management will have complete control over
Customer Fiat Assets and Customer Crypto Assets, including assets associated with BAM
Trading’s staking-as-a-service program, all Private and Administrative Keys and New Private and
Administrative Keys, that control any wallets, staking operations, and/or any withdrawals,
transfers, or movement of assets, except as otherwise specified in this Consent Order. Nothing in
this paragraph will prevent BAM Trading from relying on non-affiliated third-party custodians
located within the United States to provide custody and related services.
II.
IT IS FURTHER ORDERED that on or before the date the Court issues this Consent
Order, Stipulating Defendants will, through their officers and employees or a non-affiliated third
party custodian within the United States, ensure, and each confirm to counsel of record for the
SEC, that BAM Trading and BAM Management obtain and maintain sole possession, custody,
and control of all Customer Assets and can transfer them solely for purposes set forth in this
Consent Order, and subject to the other provisions of this Consent Order, and all transfers and
withdrawals of Customer Assets will solely be under the direction and control of BAM Trading
and BAM Management, through officers and employees located in the United States, or a nonaffiliated third party custodian located in the United States;
2
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Case 1:23-cv-01599-ABJ Document 71 Filed 06/17/23 Page 3 of 12
1.
IT IS FURTHER ORDERED that BAM Trading and BAM Management will not
provide possession, custody, or control over Customer Assets to any individual or entity, including
Binance, Zhao, and, with the exception of BAM Trading and BAM Management, any individual or
entity with any affiliation, agreement, or other relationship with Binance, Zhao, or any Zhao- owned
or -controlled entity (these individuals and entities collectively, “Binance Entities”). BAM
Trading and BAM Management, including their officers and employees, will remove and not
designate any of the Binance Entities as an administrator, account holder or signatory of, or
otherwise having any authority to transfer or withdraw from, any account or wallet holding
Customer Assets, without first obtaining leave of the Court. Further, Stipulating Defendants
including their employees or agents, will delete or destroy, and will ensure the Binance Entities
delete or destroy, any existing copies of Private and Administrative Keys and/or effect the
immediate dissolution of any existing formal or informal agreements (whether written or verbal)
for the control, exercise of control, or transfer of Private and Administrative Keys or Customer
Assets, that would facilitate or permit any transactions or actions contrary to this Consent Order’s
requirement that Customer Assets be held solely by BAM Trading and BAM Management in the
United States and may be transferred solely for the purposes set forth in this Consent Order. This
paragraph does not limit BAM Trading’s ability to provide customers other than the Binance
Entities with possession, custody, or control over their own Customer Assets or rely on nonaffiliated third-party custodians in the United States to provide custody and related services for
Customer Assets.
2.
IT IS FURTHER ORDERED that within 14 days of entry of the Consent Order,
BAM Trading and BAM Management will begin to establish new wallets, and Stipulating
Defendants will begin to transfer all Customer Crypto Assets to the new wallets with new private
3
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Case 1:23-cv-01599-ABJ Document 71 Filed 06/17/23 Page 4 of 12
and administrative keys. These “New Private and Administrative Keys” (which are defined as such
keys and any portion or copy thereof, any devices and/or software managing such keys, and any
portion or copy thereof for the new wallets) will be in the sole possession, custody, and control of
BAM Trading officers and employees who are located in the United States. These New Private
and Administrative Keys, will not be provided to or in any way shared with the Binance Entities.
BAM Trading shall confer with counsel of record for the SEC regarding a reasonable timeline for
completing this work and will provide them with the addresses for all new wallets holding
Customer Assets, both hot and cold, and will identify the specific crypto asset(s) held within each
wallet.
3.
IT IS FURTHER ORDERED that for the pendency of this litigation Defendants
BAM Management and BAM Trading may dispose, transfer, pledge, encumber, or assign assets
presently owned by BAM Management or BAM Trading, in whatever form such assets may exist
and wherever located, solely to make payments for expenses or to satisfy obligations incurred in
the ordinary course of business as set forth in Docket # 62 (“BAM Ordinary Course Business
Expenses”) and for no other purpose. BAM Trading and BAM Management may not in any
circumstance make payments, incur any new obligations, or transfer any assets, to or for the benefit
of any of the Binance Entities or any individual or entity acting on behalf or for the benefit of any
such Binance Entity.
4.
IT IS FURTHER ORDERED that, during the pendency of this action, BAM
Trading and BAM Management shall provide, subject to a protective order entered in this case,
the SEC’s counsel of record with a copy of its monthly report of BAM Ordinary Course Business
Expenses (substantially in the form set forth in Exhibit A in the mediation) that include the total
amount spent, a breakdown of the amounts in each category and subcategory enumerated in
4
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Exhibit A, and any amounts aggregating in excess of $150,000 to foreign payees. The SEC may
seek further information from BAM Management and BAM Trading concerning the monthly
BAM Ordinary Course Business Expenses information as set forth in Exhibit A.
5.
IT IS FURTHER ORDERED that within 14 days of entry of the Consent Order,
Stipulating Defendants will ensure that “Private and Administrative Keys,” as defined in Section I
(page 2) of this Consent Order, and, upon creation, New Private and Administrative Keys, will be
in the sole possession, custody, and control of BAM Trading officers and employees who are
located in the United States, or by non-affiliated third-party custodians in the United States under
the direction and control of BAM Management and BAM Trading officers and employees located
in the United States. The Private and Administrative Keys and New Private and Administrative
Keys, will not be provided to or in any way shared with the Binance Entities. BAM Trading will
keep current its list of hot and cold wallets and make that list available to counsel of record for the
SEC upon request.
6.
IT IS FURTHER ORDERED that BAM Trading may continue to transfer
Customer Assets to external wallets or accounts solely at the direction of the beneficial owners of
such Customer Assets or to support redemptions or transfers directed by such customers subject
to the prohibition above that BAM Trading and BAM Management, including their officers and
employees, may not in any circumstance transfer Customer Assets to or for the benefit of any of
the Binance Entities. Notwithstanding the foregoing and subject to BAM Trading’s inclusion of
the details of any such redemptions in or alongside its monthly report of BAM Ordinary Course
Business Expenses and subject to a protective order entered in this case, BAM Trading may support
redemptions of Customer Assets belonging personally to U.S.-based employees of Binance
Entities.
5
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7.
IT IS FURTHER ORDERED that BAM Trading may transfer custody of
Customer Crypto Assets deposited, held, traded, staked, or accrued through BAM Trading’s
staking-as-a-service program (“Staking Assets”) to custodians BitGO or Aegis provided the
following criteria are met:
a. the control of Staking Assets in these wallets, including, but not limited to,
Private and Administrative Keys and New Private and Administrative Keys, are
maintained and directed solely by BAM Trading officers and employees located
in the United States or by BitGO and Aegis;
b. if BAM Trading holds the Private and Administrative Keys or New Private and
Administrative Keys for these wallets, custody and control of these keys is held
in the United States by BAM Trading personnel located in the United States; and
c. all transfers and withdrawals require the approval of both BAM Trading and, as
necessary, BitGO and Aegis.
d. The Binance Entities shall not have possession, custody, or control of these
Staking Assets, including, but not limited to, any authority, formally or
informally, directly or indirectly, to control, transfer, or withdraw, these Staking
Assets.
III.
IT IS FURTHER ORDERED that Stipulating Defendants, their directors, officers,
agents, servants, employees, attorneys, depositories, banks, and those persons in active concert or
participation with any one or more of them, and each of them, be and they hereby are restrained
and enjoined from, directly or indirectly, destroying, mutilating, concealing, altering, disposing of,
or otherwise rendering illegible in any manner, any of the books, records, documents,
6
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Case 1:23-cv-01599-ABJ Document 71 Filed 06/17/23 Page 7 of 12
correspondence, brochures, manuals, papers, ledgers, accounts, statements, obligations, files and
other property of or pertaining to Stipulating Defendants relevant to the subject matter of this
action, wherever located and in whatever form, electronic or otherwise, until further Order of this
Court or as required in Section II.1.
IV.
IT IS FURTHER ORDERED that, on or before 20 days from the date the Court enters
this Consent Order, the Stipulating Defendants, to the best of their knowledge and ability, provide
counsel for the SEC with a preliminary list of:
1. accounts and wallets holding Customer Fiat, Customer Crypto Assets, and funds or
assets of either BAM entity, and the value of the Customer Fiat, Customer Crypto
Assets, and funds or assets held; and
2. customers of the Binance.US trading platforms and related services, and the balance
of Customer Assets associated with each customer’s Binance.US account and/or
Binance.US wallet.
IT IS FURTHER ORDERED that, on or before 20 days from the date the Court enters
this Consent Order, Binance will provide counsel for the SEC with details about the users on the
Binance.com platform previously reflected in the aggregate U.S. KYC and potential U.S. nonKYC trading datasets produced to the SEC on December 6, 2021 and August 18, 2022 reflecting
U.S. KYC users who engaged in transactions on Binance.com beginning on June 1, 2019 and
ending in September 2021 and potential U.S. non-KYC users who engaged in transactions on
Binance.com beginning on June 1, 2019 and ending on January 19, 2022. To the extent such users
remain on the Binance.com platform, Binance will provide counsel for the SEC with details of their
restricted account balances.
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IT IS FURTHER ORDERED that, on or before 45 days from the date the Court issues
this Consent Order, each of the Stipulating Defendants shall serve upon the Commission a verified
written accounting, which the Stipulating Defendants must sign, including through an officer for
each entity authorized to sign on behalf of and bind the entity Defendants, under penalty of perjury,
providing the following information;
1.
Each account or wallet holding Customer Assets or assets of either BAM
Management or BAM Trading (“BAM Entity”), regardless of the account or wallet holder or
signatory, and/or maintained in any BAM Entity’s name, held by any BAM Entity or for any BAM
Entity’s direct or indirect beneficial interest, or over which any BAM Entity exercised any direct
or indirect control from December 1, 2022, through the date of the accounting, including the name
of the financial institution, exchange, or other entity or individual holding such account or wallet,
name and the account number, and the wallet address; and
2.
All assets, funds, crypto assets, securities, or other property, real or personal, within
each BAM Entity’s possession, custody, or control, that is valued greater than $1,000, that was
transferred to or for the benefit of any Defendant or any Binance Entity from December 1, 2022, to
the date of the accounting, including a description of each transfer and what was transferred, the
value of the transfer, the name of the recipient, the date of the transfer, and the reason for the
transfer;
V.
IT IS FURTHER ORDERED THAT, commencing with the time and date of this Order,
in lieu of the time periods and notice provisions of Rules 26, 30, 33, 34, 36 and 45 of the Federal
Rules of Civil Procedure, discovery shall proceed as follows, subject to a protective order entered
in this case:
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1.
For the next 90 days, the SEC may conduct expedited discovery of the Stipulating
Defendants (including their personnel) and of the BAM Entities’ third-party auditors and
custodians of assets concerning Customer Assets and their possession, custody, control, transfer or
movement, security, segregation, availability, and any encumbrances or limitations that would
make them unavailable for transfer or withdrawal by customers, including, but not limited to type,
identity, location, value, custody, control, restrictions, and whether there are sufficient assets to
satisfy customer liabilities or meet customer claims for Customer Assets held on their behalf. Such
expedited discovery shall not commence against Binance, Binance personnel, and Zhao for 45
days. This limited expedited discovery pertaining to the Customer Assets shall not be counted
against any discovery limits imposed under the Federal Rules of Civil Procedure;
2.
Pursuant to Rule 30(a) of the Federal Rules of Civil Procedure and to the time
periods set forth in paragraph 1 above, the SEC may take depositions of the Stipulating Defendants
(including their personnel) and of the BAM Entities’ third-party auditors and custodians of assets
who are involved in or otherwise knowledgeable about asset clearing, custody, and control, and
software development and operational tasks associated with asset clearing, custody, and control,
regarding the Customer Assets, and their possession, custody, control, transfer, movement,
security, segregation, availability, and any encumbrances or limitations that would make them
unavailable for transfer or withdrawal by customers, including, but not limited to type, identity,
location, value, custody, control, restrictions, and whether there are sufficient assets to satisfy
customer liabilities or meet customer claims for Customer Assets held on their behalf upon oral
examination on 10 calendar days’ notice of any such deposition. As to such personnel, the SEC
may depose such witnesses after serving a deposition notice by email, hand, or overnight courier
upon such individuals, and without serving a subpoena on such witness. If the Stipulating Parties
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agree to conduct any depositions virtually, and the oath of the deponent may be administered
remotely by the court reporter, through audio-video means, and this oath shall have the same effect
as if given in the physical presence of the deponent. Subject to compliance with all laws,
depositions of persons located outside the United States shall presumptively be conducted
remotely, provided such persons are located in, or will travel to, a location where voluntary
depositions and testimony under penalty of perjury pursuant to the Federal Rules of Civil
Procedure are permitted;
3.
Pursuant to Rule 33(a) of the Federal Rules of Civil Procedure and to the time
periods set forth in paragraph 1 above, the Stipulating Defendants shall answer any interrogatories
served by the SEC regarding Customer Assets and their possession, custody, control, transfer,
movement, security, segregation, availability, and any encumbrances or limitations that would
make them unavailable for transfer or withdrawal by customers, including, but not limited to type,
identity, location, value, custody, control, restrictions, and whether there are sufficient assets to
satisfy customer liabilities or meet customer claims for Customer Assets held on their behalf, within
20 calendar days of service of such interrogatories;
4.
Pursuant to Rule 34(b) of the Federal Rules of Civil Procedure and to the time
periods set forth in paragraph 1 above, the Stipulating Defendants shall produce all documents
requested by the SEC regarding the Customer Assets and their possession, custody, control,
transfer, movement, security, segregation, availability, and any encumbrances or limitations that
would make them unavailable for transfer or withdrawal by customers, including, but not limited to
type, identity, location, value, custody, control, restrictions, and whether there are sufficient assets
to satisfy customer liabilities or meet customer claims for Customer Assets held on their behalf
within 10 calendar days of service of such request, with production of the documents made to
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counsel of record for the SEC or such other person or place as counsel for the SEC may direct in
writing; and
5.
All written responses to the SEC’s requests for discovery under the Federal Rules
of Civil Procedure shall be delivered electronically, or such other place and person as counsel for
the SEC may direct in writing.
VI.
IT IS FURTHER ORDERED THAT for purposes of this action only Stipulating
Defendants have agreed to waive service of the Summons and Complaint pursuant to Federal Rule
of Civil Procedure 4(d) and to accept service through counsel of record of any further filing or other
process in this case.
VII.
IT IS FURTHER ORDERED THAT nothing in this Consent Order shall otherwise alter
the rights, obligations, or duties of the Stipulating Defendants or the SEC. Nothing in this Consent
Order shall be construed as affecting any party’s rights to assert any claims or defenses, to constitute
a waiver of any party’s right to a trial by jury, as precluding the parties from objecting to the scope
or nature of any discovery sought, or seeking to modify, on consent or by order of the Court, any of
the deadlines or orders set forth in this Order. Further, nothing in this Order shall be construed as
an explicit or implicit agreement or endorsement by the Commission that the business of BAM
Management and BAM Trading may continue or is otherwise lawful, nor as a concession by the
Stipulating Defendants that their actions were in any way improper or unlawful.
VIII.
IT IS FURTHER ORDERED THAT this Court shall retain jurisdiction over the
Stipulating Defendants in order to modify, impose, implement, carry out, and enforce the terms of
this Consent Order.
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IX.
The Stipulating Parties retain the right to seek additional relief, or relief from this Consent
Order, as available under the Federal Rules of Civil Procedure and applicable law, including but
not limited to Binance’s and Zhao’s ability to contest jurisdiction other than jurisdiction to impose,
implement, carry out, and enforce this Consent Order.
X.
IT IS FURTHER ORDERED THAT this Order binds the following who receive actual
notice of this Stipulation and Consent Order by personal service or otherwise: (a) each Stipulating
Defendant’s officers, agents, servants, employees, and attorneys; (b) other persons in active
concert or participation with Stipulating Defendants or with anyone described in (a).
SO ORDERED.
AMY BERMAN JACKSON
United States District Judge
DATE: June 17, 2023
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