The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, the largest cryptocurrency exchange in the world. Late on Friday, a federal court decided to allow the litigation to proceed in part.
The U.S. District Court for the District of Columbia’s Judge Amy Berman Jackson’s ruling strikes a blow to Binance, which had requested that the court dismiss the SEC’s action alleging that Binance and its founder and former CEO, Changpeng Zhao, violated securities laws.
In June 2023, the SEC filed a lawsuit against Binance, alleging that Zhao and the exchange had falsified trade volume figures, stolen client cash, neglected to exclude U.S. users from using the platform, and misled investors about their market surveillance measures.
In addition, the regulator charged Binance with illegally enabling the trade of several cryptocurrency tokens that SEC considered unregistered securities.
The decision compounds the exchange’s problems, since Binance had already consented in November to settle with the Department of Justice and the Commodities Futures Trading Commission for violations related to illegal funding by paying $4.3 billion.
Nonetheless, the court’s decision on Friday represents a partial win for the cryptocurrency industry as a whole. The judge agreed with an earlier judge that the SEC had not proven that tokens traded on exchanges by sellers other than Binance in the secondary market were not securities.
