Binance, a major cryptocurrency exchange, encountered a setback as a United States court declined to dismiss several claims brought against it by the Securities and Exchange Commission (SEC).
In a court filing on June 28, Judge Amy Berman Jackson specified that claims concerning Binance’s staking program, the initial coin offering of BNB, anti-fraud violations, and the SEC’s assertion that former CEO Changpeng “CZ” Zhao acted as a “control person” will proceed.
Additionally, the court ruled that Binance should have been registered under the Exchange Act.
However, Judge Jackson did dismiss claims related to secondary market sales of BNB and transactions involving the Binance USD (BUSD) stablecoin.
Her decision to dismiss the BNB secondary market sales claim echoed a similar ruling by Judge Analisa Torres in a previous SEC case against Ripple.
Scott Johnsson, a finance lawyer, characterized the ruling as a significant setback for the SEC, while Fox Business reporter Eleanor Terrett anticipated its implications for other cryptocurrency platforms such as Coinbase, Kraken, and Consensys.
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Judge Jackson also rejected the SEC’s claims regarding Binance’s passive income feature, “Simple Earn,” scheduling a court hearing for further proceedings on July 9.
The SEC, under the leadership of Gary Gensler, initiated legal action against Binance in June 2023, alleging that the exchange offered unregistered securities and operated unlawfully within the U.S.
Binance and CZ sought to dismiss the lawsuit approximately three months later, arguing against the SEC’s purported overreach.
Despite these legal challenges, Binance maintains its status as the world’s largest cryptocurrency exchange, boasting more than 200 million users and managing assets exceeding $100 billion.
This ongoing legal battle underscores regulatory scrutiny within the cryptocurrency industry, particularly concerning compliance with securities laws and operational licensing in various U.S. states.
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