A federal judge has ruled that most of the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Binance can proceed. This marks a pivotal moment in the regulatory agency’s legal action against the cryptocurrency exchange.
Court Ruling on SEC’s Case Against Binance
On June 28, U.S. District Court Judge Amy Berman Jackson ruled that 10 out of the 13 allegations filed by the SEC against Binance will move forward. These allegations include mishandling customer funds, providing misleading information to investors and regulators, and violating securities laws.
The SEC initially filed the lawsuit in June 2023, accusing Binance of several regulatory violations. Binance contested these allegations, seeking to have the case dismissed by claiming that the SEC was exceeding its jurisdiction, particularly concerning foreign cryptocurrency transactions.
Specifics of the Ruling
Judge Jackson decided that out of the 13 counts, 10 will proceed fully, two will proceed partially, and one will be dismissed. The dismissed allegation relates to the sales of Binance USD (BUSD), a stablecoin that faced regulatory action in February 2023, resulting in the suspension of its issuance by Paxos.
Additionally, part of a claim regarding secondary sales of Binance’s native token BNB by parties other than Binance was dismissed. An aspect of the case related to Binance’s Simple Earn program, which lets users earn interest on crypto assets, was partially dismissed, with the rest of that allegation allowed to continue.
Context and Consequences
This case is separate from a previous penalty of $4.3 billion that Binance faced in November 2023 for breaches of anti-money laundering and sanctions regulations. Despite the ongoing legal issues, Binance’s BNB token remained stable, trading at $570 at the time of the ruling, and has outperformed many other cryptocurrencies in recent months.
The SEC maintains that most cryptocurrencies are securities, a stance that has led to multiple enforcement actions. However, this approach has yet to conclusively address the classification of digital tokens through legal rulings.
Industry Reactions and Related News
In a related development on June 28, Ethereum solutions provider ConsenSys issued a statement criticizing the SEC for what it described as regulatory overreach. The SEC has accused ConsenSys of selling unregistered securities through its MetaMask staking service, which the company sees as part of the broader pattern of aggressive regulatory actions against the crypto industry.
Conclusion
The court’s decision to allow the majority of the SEC’s case against Binance to advance is a significant step in the ongoing legal and regulatory scrutiny of the cryptocurrency exchange. The final outcome of this lawsuit could have far-reaching implications for the regulatory framework governing the crypto sector in the US
