A U.S. court has ruled that most of the claims brought by the Securities and Exchange Commission (SEC) against cryptocurrency exchange Binance will move forward.
Key Claims to Proceed
In a court filing dated June 28, Judge Amy Berman Jackson stated that the claims related to Binance’s staking program, the sale of BNB following its initial coin offering (ICO), and allegations of anti-fraud violations will continue. Additionally, the claim that former Binance CEO Changpeng “CZ” Zhao acted as a “control person” and that Binance was required to register under the Exchange Act will also proceed.
Dismissed Claims
However, not all claims by the SEC were upheld. Judge Jackson dismissed the SEC’s claims related to the secondary market sales of BNB and all sales related to the Binance USD (BUSD) stablecoin. This decision was influenced by Judge Analisa Torres’ ruling in the SEC’s case against Ripple, which set a precedent that secondary market sales do not necessarily constitute securities transactions.
Reactions and Implications
The dismissal of the secondary market sales claim was unexpected for some legal experts. Finance lawyer Scott Johnsson described it as a “big loss” for the SEC. Fox Business reporter Eleanor Terrett suggested that this opinion could be used by legal teams at other crypto firms like Coinbase, Kraken, and Consensys to strengthen their positions in ongoing litigations.
Additionally, the court rejected the SEC’s claims concerning Binance’s passive income feature, “Simple Earn.”
Background and Next Steps
The SEC, led by Chairman Gary Gensler, filed the lawsuit against Binance in June 2023, accusing the exchange of offering unregistered securities and operating illegally in the United States. Binance and CZ moved to dismiss the lawsuit a few months later, arguing that the SEC had overstepped its legal authority.
A court hearing is scheduled for July 9, where further proceedings will be discussed.
Summary Review: While Binance faces a significant legal battle ahead with most of the SEC’s claims moving forward, the dismissal of key secondary market sales claims provides some relief. The outcome of this case could have broader implications for the regulatory landscape of cryptocurrency exchanges in the U.S.
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