A recent court ruling has permitted most of the U.S. SEC's lawsuit against Binance to proceed, marking a significant setback for the cryptocurrency exchange. The SEC alleges that Binance and its founder, Changpeng Zhao, violated securities laws by inflating trading volumes, diverting funds, and misleading investors.

The lawsuit accuses Binance of mishandling customer funds and facilitating unregistered securities trading. Out of thirteen charges, ten will proceed, while parts of three were dismissed. This decision has major implications for the crypto industry, underlining the ongoing regulatory scrutiny it faces.

Binance is already grappling with mounting legal issues. In November, it agreed to pay $4.3 billion to settle charges with the Department of Justice and the CFTC over illicit finance violations. The SEC's lawsuit is separate, focusing on unregistered trading and misleading practices, highlighting the increasing pressure on Binance from U.S. regulators.

The legal challenges have affected Binance's market position, causing fluctuations in the price of BNB, its native token. Binance maintains that the SEC is overreaching, with Zhao defending the company's practices. However, the crypto market remains cautious, observing how these legal proceedings will unfold.

The SEC continues to pursue enforcement actions against crypto entities under Chair Gary Gensler, arguing that most digital tokens are unregistered securities. The ongoing legal action against Binance is part of a broader crackdown on crypto exchanges. The industry awaits further legal clarifications, hoping for more defined regulations in the future.