US Judge lets most of SEC case against Binance proceed

A federal judge dismissed part of the U.S. Securities and Exchange Commission’s (SEC) lawsuit against crypto exchange Binance and founder Changpeng Zhao, but allowed other charges, including those against the holding company for Binance.US, to proceed. Judge Amy Berman Jackson of the District Court for the District of Columbia ruled that the SEC’s charges related to the initial coin offering and ongoing sales for BNB, BNB Vault, staking services, failure to register, and fraud charges could proceed. However, she granted Binance and Zhao’s motion to dismiss charges tied to secondary BNB sales and Simple Earn.

• The SEC sued Binance, Binance.US, and Zhao last summer, alleging the exchanges offered unregistered broker, trading, and clearing services in the U.S. for unregistered digital asset securities.
• The regulator has brought similar charges against Coinbase, Kraken, and, as of Friday morning, Consensys and MetaMask.
• Judge Jackson noted that the SEC had brought a plausible claim under most of the charges it filed and highlighted the differentiation between alleged investment contracts and the tokens themselves as clarified by other district courts.

Zhao is currently serving a 4-month sentence tied to a sanctions violation charge brought by the Department of Justice and the Treasury Department, separate from the SEC’s case. The judge cited Judge Analisa Torres’ 2023 ruling in the SEC’s case against Ripple Labs in granting Binance’s motion to dismiss the secondary BNB sales claim, emphasizing the economic reality of the tokens’ transactions. Judge Jackson also rejected arguments that the SEC can’t bring enforcement actions against crypto entities under the “major questions doctrine.” The judge has scheduled a hearing for July 9.