US Court Partially Dismisses SEC’s Charges Against Binance

In a late Friday sitting, the District Court for the District of Columbia partially closed the case between the leading exchange Binance, its co-founder Changpeng Zhao (CZ), and the Securities and Exchange Commission (SEC). 

The court, ruled over by Judge Amy Berman Jackson, granted Binance and Zhao’s motion to dismiss secondary BNB sales and Simple Earn charges. In contrast, charges related to the initial coin offering, ongoing sales for BNB, BNB Vault, staking services, failure to register, and fraud were allowed to go to trial.

The lawsuit was one of similar filings by the SEC against major exchanges, including Coinbase, Robinhood, and Uniswap. It was also different from a case in which a ruling in May sentenced CZ to four months in prison.

The Legal Battle Drags On

The SEC sued Binance and Zhao a year ago, alleging mishandling of customer funds, misleading investors and regulators, and violating securities rules. The defendants contested the claims and sought dismissal. However, out of 13 counts, 10 will proceed in their entirety, two partially, and only one count related to sales of the now-defunct stablecoin BUSD was dismissed.

According to the SEC’s complaint, Binance and Zhao engaged in the sale of unregistered digital asset securities, including the exchange’s native token, BNB. The regulator alleges that the defendants failed to register as a broker, trading, and clearing agency and didn’t comply with applicable laws and regulations. The SEC seeks injunctive relief, disgorgement, and civil penalties against the defendants.

Judge Jackson’s ruling dismissed charges related to secondary sales but allowed claims associated with initial coin offerings, failure to register, and fraud to proceed. The ruling is a blow to Binance and Zhao, who had sought to have the case dismissed in its entirety.

Binance Maintains Innocence

Binance denied all charges and maintained that its operations comply with applicable laws and regulations. In a statement, a Binance spokesperson said, “We are disappointed in the court’s ruling but remain committed to working with regulators to ensure compliance with applicable laws and regulations.”

A hearing to address the remaining charges is set for July 9, and industry experts are closely watching the developments, as the outcome could have far-reaching implications for the cryptocurrency industry.