[A U.S. judge allows the SEC to continue hearing most of its cases against Binance, rejecting secondary sales charges]
A U.S. federal judge has dismissed part of the U.S. Securities and Exchange Commission's (SEC) lawsuit against cryptocurrency exchange Binance and its founder Changpeng Zhao, but allowed other charges to proceed. In Friday’s ruling, Judge Amy Berman Jackson of the District Court for the District of Columbia ruled that the SEC’s investigation into Binance’s initial coin offering (ICO) and BNB, BNB Vault, staking service, failure to register and The fraud charges can proceed, but those related to secondary BNB sales and Simple Earn were dismissed.
Last summer, the SEC sued Binance, Binance.US and Changpeng Zhao, accusing the exchanges of providing unregistered brokerage, trading and clearing services in the United States involving unregistered digital asset securities. The regulator also made similar accusations against Coinbase, Kraken and Consensys.
Judge Jackson wrote in his ruling that the SEC made reasonable claims on most of the charges. She believes that other local courts, when dealing with SEC enforcement actions involving cryptocurrencies, have struggled to distinguish between so-called investment contracts and the tokens themselves. This distinction is consistent with the Supreme Court’s earliest pronouncements on the term “investment contract” in the definition of “security.” Consistent.
Changpeng Zhao is currently serving a four-month prison sentence related to sanctions violation charges brought by the Justice and Treasury departments. The SEC case against him is separate from this criminal charge.
Citing Judge Analisa Torres's 2023 SEC ruling in the SEC's case against Ripple Labs, the judge granted Binance's motion to dismiss the secondary BNB sales allegations, arguing that the economic realities of token trading have implications for the application of securities laws. She dismissed arguments that the SEC cannot pursue enforcement actions against crypto entities under the “significant issues doctrine,” which holds that Congress must direct federal agencies’ authority when dealing with significant industries.
