SEC Binance Lawsuit Gets Court Approval to Proceed

Key Points:

• Judge Amy Berman Jackson allowed the SEC Binance lawsuit for unregistered securities sales to proceed with some claims dismissed.
• SEC’s allegations on secondary BNB sales and Binance USD transactions were dismissed due to Howey Test considerations.

Judge Amy Berman Jackson of the District of Columbia Court has ruled in favor of the U.S. Court. Securities and Exchange Commission (SEC) allows their lawsuit against Binance to proceed, albeit with limitations.

SEC Binance Lawsuit Approved to Move Forward Following Unregistered Securities Argument

The allegations in the SEC Binance lawsuit that BNB coin sales constitute unregistered securities were partially upheld, while claims regarding secondary BNB sales were dismissed, CoinDesk first reported the news.

Judge Jackson’s decision, echoed Judge Analissa Torres’ stance in the Ripple case with the importance of assessing the economic reality of token transactions under the Howey Test. The SEC’s claims regarding the Simple Earn feature on Binance were also refuted by Jackson. FOX Business reporter Eleanor Terrett expects lawyers at Coinbase, Kraken, and Consensys to use this argument in their lawsuits with the SEC.

SEC Is Putting Pressure on Binance Among Other Lawsuits

The SEC Binance lawsuit, filed last summer, accuses the exchange and its CEO Changpeng Zhao of offering unregistered broker, trading, and clearing services in the U.S. for digital asset securities. Similar charges have been levied against other major exchanges like Coinbase and Kraken.

Binance recently settled with the U.S. Department of Justice and the Commodities Futures Trading Commission (CFTC), agreeing to a $4.3 billion fine. The settlement also mandated Zhao’s resignation as CEO due to negligence in managing money laundering risks on the platform.

Zhao, who is currently serving a 4-month prison sentence for separate charges, including a sanctions violation, faced criticism from finance experts following the ruling. The SEC’s ongoing efforts to regulate the crypto industry have included lawsuits against numerous cryptocurrencies, impacting major players in the market.