A federal judge overseeing the U.S. Securities and Exchange Commission’s case against Binance ruled that most of the case can proceed, but dismissed charges tied to the sale of BUSD and secondary sales of BNB.
Judge Amy Berman Jackson from the U.S. District Court for the District of Columbia ruled that the Securities and Exchange Commission had brought plausible allegations against Binance, Binance.US, and Changpeng Zhao, refusing to dismiss most of the charges against the companies. She did, however, dismiss charges tied to secondary sales of BNB by sellers who aren’t Binance, the sale of BUSD, and Binance’s “Simple Earn” product.
One important question surrounding the application of securities law to cryptocurrencies is whether secondary sales are considered investment contracts. While there have been rulings from district courts on this matter, there have been no rulings from appeals courts yet.
Judge Jackson’s ruling mostly upheld the current status quo regarding litigation around crypto and securities. She stated that the major questions doctrine does not apply, the SEC’s arguments are mostly plausible, and there is a reasonable case based on the alleged facts.
The ruling allowed most of the charges to move forward, including counts related to the BNB initial coin offering, Binance’s ongoing sales of the token, the BNB Vault, Binance.US’s staking service, Exchange Act violations, and anti-fraud provisions under the Securities Act.
In response to the ruling, Binance has reiterated that there are critical limits on the SEC’s regulatory authority over the crypto industry. The judge’s ruling on secondary sales by sellers other than Binance and stablecoins has been well-received in the crypto industry.
The judge highlighted that the SEC’s position on tokens being securities if they were marketed as such during the initial sale could create confusion in the marketplace. The ruling also left room for further arguments in future cases regarding secondary transactions.
The U.S. Supreme Court’s recent decisions may also impact the crypto industry’s relationship with federal regulators moving forward. These decisions include rulings on in-house administrative proceedings, the Chevron Deference precedent, and the statute of limitations on private parties suing federal agencies.
In other news, ahead of the U.K. Election, major parties have remained silent on crypto issues, and crypto was not mentioned during the first 2024 U.S. Presidential Debate. This week, the U.K. is holding its election day, the U.S. is celebrating Independence Day, and elsewhere, it’s (probably) just Thursday.
In financial news, Evolve Bank and Trust experienced a ransomware attack, and Synapse, a financial technology intermediary, filed for bankruptcy. Fintech customers, unlike traditional bank customers, do not enjoy protection from the Federal Deposit Insurance Corporation.
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