A federal judge has dismissed a portion of the U.S. Securities and Exchange Commission’s (SEC) lawsuit against cryptocurrency exchange Binance and its founder Changpeng Zhao, while allowing other charges, including those against the holding company for Binance.US, to move forward.
Judge Amy Berman Jackson of the District Court for the District of Columbia issued a ruling late Friday, permitting the SEC’s charges against Binance related to initial coin offerings (ICOs), ongoing sales for BNB, BNB Vault, staking services, and allegations of failure to register and fraud to proceed. However, she granted Binance and Zhao’s motion to dismiss charges concerning secondary BNB sales and Simple Earn.
Last summer, the SEC filed a lawsuit against Binance, Binance.US, and Zhao, alleging that the exchanges were offering unregistered broker, trading, and clearing services for unregistered digital asset securities in the United States. Similar charges have been levied against other prominent exchanges including Coinbase, Kraken, Consensys, and MetaMask.
Judge Jackson’s order acknowledged the SEC’s plausible claims under most of the charges filed, noting distinctions made by other district courts in cryptocurrency-related enforcement actions. She emphasized the economic realities of token transactions as significant factors in applying securities laws, drawing parallels to previous rulings in similar cases.
Zhao, currently serving a 4-month sentence for a separate sanctions violation charge, faces distinct legal challenges from the SEC apart from his criminal case. The judge’s decision also underscored the applicability of SEC enforcement actions in the cryptocurrency industry, rejecting arguments against its authority under existing legal doctrines.
A hearing is now scheduled for July 9 to address the ongoing legal proceedings in this case.