A U.S. court has rejected Binance’s attempt to have the Securities and Exchange Commission (SEC), the nation’s securities watchdog, drop most of the allegations made against the cryptocurrency exchange.
According to the court filing by Judge Amy Berman Jackson on June 28, claims related to Binance’s staking program, the sale of BNB tokens following its initial coin offering, and anti-fraud violations will proceed.
The SEC’s argument that Changpeng “CZ” Zhao, the former CEO of Binance, acted as a “control person” and that Binance was required to register under the Exchange Act was also upheld by the court.
Court Ruling Wasn’t a Complete Victory for SEC
The SEC did not, however, win the case outright.
Claims concerning BNB secondary market sales and all sales connected to the Binance USD (BUSD) stablecoin were dismissed by Judge Jackson.
She cited Judge Analisa Torres’ decision in the SEC’s case against Ripple as justification for rejecting the SEC’s allegation that BNB secondary market sales occurred.
Scott Johnsson, a finance lawyer, was taken aback by the court’s ruling and called it a major blow to the securities watchdog.
Eleanor Terrett of Fox Business expects attorneys for Coinbase, Kraken, and Consensys to use this ruling to bolster their claims in their individual lawsuits.
You can fully expect @coinbase, @krakenfx and @Consensys lawyers to use this opinion to bolster their positions in their own litigations.
— Eleanor Terrett (@EleanorTerrett) June 29, 2024
And the @SECGov lawyers can no longer argue that the @Ripple ruling was merely an outlier that no other judges agree with. https://t.co/xC4VOtJvOX
The SEC’s allegations regarding Binance’s “Simple Earn” feature for passive income were also dismissed by Judge Jackson.
To discuss the issue further, a court hearing has been set for July 9.
In June 2023, the SEC, under the leadership of Gary Gensler, filed a lawsuit against Binance, claiming that the exchange had engaged in unlawful activities within the US and offered the sale of unregistered securities.
About three months later, Binance and CZ filed a motion to dismiss the lawsuit, claiming the SEC had overreached its legal jurisdiction.
Binance has encountered difficulties in the regulatory arena in addition to the lawsuit.
Alaska, Florida, Maine, and North Carolina are among the seven US states that have either denied Binance permission to renew its money transmitter license or revoked it.
In addition, CZ is incarcerated for four months for breaking money laundering regulations.
Binance Maintains Leading Position
Despite these legal hurdles, Binance continues to hold its position as the world’s largest cryptocurrency exchange, boasting over 200 million users and managing assets totaling $100 billion.
In 2022, just two years ago, Binance claimed to have 130 million users.
By 2023, there were 170 million users on the exchange, up 40 million from the previous year.
Remarkably, Binance has already added at least 30 million new users in just the first half of 2024.
Following some regulatory obstacles, Binance returned to the country after successfully registering with the Financial Intelligence Unit of India (FIU-IND) in May.
Before that, the exchange declared that it had secured a license from VARA, the regulatory body in Dubai, which allowed the platform to serve both retail and institutional and qualified clients.