Is there hope for the cryptocurrency industry? Binance may reach an agreement with the SEC to avoid asset freezes.

Binance and the US Securities and Exchange Commission (SEC) are expected to reach an agreement by Thursday to avoid asset freezes.

On Tuesday local time, US District Court Judge Amy Berman Jackson said that "there is not much disagreement between Binance and the SEC on how to protect billions of dollars of customer funds," and that Binance Exchange will not be closed during the litigation.

Binance and the SEC will hold negotiations, and Jackson has appointed a local security judge as a mediator, and has asked all parties to finalize the final details before Thursday.

Jackson admitted that "if an agreement is reached, she" absolutely does not need "to issue a restraining order."

At the same time, Jackson requested that Binance's Binance US cryptocurrency trading platform submit a "general project expenditure" list by Wednesday morning Eastern Time.

On Tuesday, the SEC proposed freezing the assets of Binance subsidiary BAM Trading Services and repatriating the management of the company. BAM Trading operates Binance US with Binance.

An SEC lawyer said that there is a risk that Binance will transfer customer assets overseas, so it is necessary to freeze assets. In court, the proposal was criticized by Jackson.

However, according to reports, Binance's response to whether there is a flow of Binance US customer funds out of the United States seems to have "frustrated" Jackson.

Binance: Refuse to accept "death sentence"

Earlier that day, Jackson hinted that she might be inclined to impose some restrictions on access to Binance US assets on the Binance platform, but not a comprehensive restraining order.

SEC lawyer Jennifer Farer told the judge on Tuesday, "We are open to (Binance) continuing to operate."

A representative lawyer for Binance US told the judge that Binance refused to accept the "death sentence" on the eighth day of the trial.

Jackson agreed, saying at a hearing, "A complete shutdown will have a significant impact on Binance and even the entire digital asset market."

Farer said that Binance has provided different versions of the story about how it holds and holds encrypted assets and funds. At the beginning, Binance US told the SEC that it had reached an agreement with Binance US, then changed its mind and said that the agreement was not operable, and finally said that the inoperable agreement had been stopped.

Is encrypted assets a security? The judge is not satisfied with the answer

Jackson also explored the core issue of this lawsuit: whether encrypted assets are securities, and if they are not securities, are they commodities?

Despite asking some basic questions about this issue, the judge was not satisfied with the answer.

As the hearing was about to begin, the judge asked the SEC lawyer to distinguish between "encrypted assets" and "encrypted asset securities." SEC's other representative lawyer, Matthew Scarlato, told the judge that the SEC had cited several examples of cryptocurrencies that were considered securities in a broader lawsuit.

As previously reported by Wall Street News, since the SEC filed lawsuits against Binance and Coinbase, over $120 billion worth of cryptocurrencies that are considered unregistered securities by US regulators have emerged.

In addition, she asked Binance US representative lawyer Matthew Martens whether Binance's token BNB is a commodity.

"This is a type of cryptocurrency," Martens said evasively.

Last Monday, the SEC officially sued Binance and its CEO Zhao Changpeng for violating US securities regulations, alleging that they had issued Binance Coin and the stablecoin BUSD without registering and accused them of participating in extensive fraud, conflicts of interest, lack of disclosure, and deliberate evasion of the law. The next day, the SEC requested an emergency freeze of Binance US assets.

In the lawsuit with the SEC, Binance US firmly stated that its clients' assets were safe, but argued at the hearing that blocking all fund flows would weaken its business and harm its clients.

According to the SEC lawsuit, Binance illegally transferred billions of dollars of client funds to bank accounts controlled by Zhao Changpeng's entities. The regulator said the funds were first transferred to third parties and then used to buy and sell cryptocurrencies.

In response, Binance proposed a compromise plan, including transferring US clients' cryptocurrency assets to a new wallet with new private keys, which will be controlled separately by Binance US employees based in the US.