A federal judge recently made a ruling in the ongoing case between the U.S. Securities and Exchange Commission (SEC) and crypto exchange Binance, as well as its founder Changpeng Zhao. The judge, Amy Berman Jackson, dismissed some of the charges brought by the SEC but allowed others to proceed.
In her order, Judge Jackson stated that the SEC’s charges against Binance for the initial coin offering, ongoing sales for BNB, BNB Vault, staking services, failure to register, and fraud can move forward. However, she granted Binance and Zhao’s request to dismiss charges related to secondary BNB sales and Simple Earn.
The SEC had filed a lawsuit against Binance, Binance.US, and Zhao last summer, alleging that the exchanges were offering unregistered broker, trading, and clearing services for unregistered digital asset securities in the U.S. This case is part of a larger crackdown by the SEC on crypto exchanges, including Coinbase, Kraken, Consensys, and MetaMask.
Judge Jackson’s order highlighted the importance of differentiating between investment contracts and tokens themselves when applying securities law. She referenced a previous ruling in the SEC’s case against Ripple Labs to support her decision to dismiss the secondary BNB sales claim.
Despite arguments against the SEC’s authority to regulate the crypto industry under the “major questions doctrine,” Judge Jackson found that the SEC has the grounds to bring enforcement actions against crypto entities. She scheduled a hearing for July 9 to further discuss the case.
It’s worth noting that Changpeng Zhao is currently serving a 4-month sentence for a sanctions violation charge unrelated to the SEC case. The SEC’s lawsuit against him is separate from this criminal charge.
Overall, this ruling sets an important precedent for the regulation of cryptocurrency exchanges and the application of securities law in the rapidly evolving crypto industry. The outcome of this case could have significant implications for how crypto entities operate in the U.S. and how the SEC enforces regulations in this space. As the case continues to unfold, it will be crucial to monitor the developments and implications for the broader crypto market.
