In a significant development, Binance, the world’s largest cryptocurrency exchange, faces continued legal challenges as a U.S. court has decided to allow most claims lodged by the Securities and Exchange Commission (SEC) to proceed. This decision underscores the ongoing regulatory scrutiny facing Binance and the broader cryptocurrency industry.
In a ruling dated June 28, Judge Amy Berman Jackson of the United States court has denied Binance’s motion to dismiss several key claims brought by the SEC. These claims pertain to Binance’s staking program, the initial sale of BNB tokens, and allegations of anti-fraud violations. Furthermore, the claim that former Binance CEO Changpeng “CZ” Zhao acted as a “control person” for the company, thereby necessitating the platform’s registration under the Exchange Act, will also move forward.
Claims Dismissed by the Court
However, not all was in favor of the SEC. The court dismissed claims related to secondary market sales of BNB and all sales concerning the Binance USD (BUSD) stablecoin. This decision was influenced by Judge Analisa Torres’ previous ruling in the SEC’s case against Ripple, which played a pivotal role in the dismissal of the SEC’s claims regarding BNB secondary market sales. This outcome was unexpected and is seen as a significant setback for the SEC, as noted by finance lawyer Scott Johnsson.
The ruling is expected to have broader implications within the cryptocurrency industry. Fox Business reporter Eleanor Terrett suggests that entities like Coinbase, Kraken, and Consensys might leverage this opinion to strengthen their positions in ongoing litigations.
SEC’s Ongoing Legal Battle with Binance
The SEC initiated a lawsuit against Binance in June 2023, accusing the exchange of offering the sale of unregistered securities and operating illegally within the United States. Binance and CZ sought to dismiss the lawsuit, contending that the SEC had overstepped its legal authority. This legal battle highlights the intense regulatory focus on cryptocurrency exchanges and their compliance with U.S. securities laws.
Aside from the SEC lawsuit, Binance has faced operational hurdles in the U.S., with seven states, including Alaska, Florida, Maine, and North Carolina, revoking or denying the renewal of its money transmitter license. Additionally, CZ is currently serving a four-month prison sentence for violating money laundering laws, adding another layer of challenge for the exchange.
Despite these legal and regulatory challenges, Binance continues to maintain its position as the leading cryptocurrency exchange globally. It boasts over 200 million users and manages assets worth approximately $100 billion, demonstrating its significant influence and reach in the market.
Upcoming Court Hearings
The next court hearing is scheduled for July 9, where further proceedings in this case will be addressed. This ongoing lawsuit is closely watched by industry observers and participants, as it could set precedents affecting regulatory approaches and the operation of cryptocurrency exchanges worldwide.
As Binance navigates through these legal challenges, the outcomes of this lawsuit could potentially reshape the operational and regulatory landscape for the cryptocurrency industry in the United States. The industry continues to watch these developments closely, given their implications for market operations and regulatory compliance.
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