On Friday, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, the world’s largest cryptocurrency exchange and a federal magistrate ruled late Friday that the majority of the lawsuit will be allowed to proceed
The SEC’s litigation against Binance and its founder and former CEO Changpeng Zhao, which alleges that they violated securities laws, was dismissed by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia.
This decision is a significant setback for Binance.
In June 2023, the SEC filed a lawsuit against Binance, alleging that the exchange and Zhao had artificially inflated their trading volumes, diverted customer funds, failed to restrict U.S. customers from their platform, and misled investors about their market surveillance controls.
The regulator also accused Binance of fraudulently facilitating the trading of numerous crypto tokens that the SEC classified as unregistered securities.
Following Binance’s November agreement to pay $4.3 billion to resolve allegations of illicit finance violations with the Department of Justice and the Commodity Futures Trading Commission, the ruling has further exacerbated the exchange’s financial difficulties.
However, Friday’s decision represents a partial victory for the cryptocurrency industry as a whole, as she concurred with a previous judge’s assertion that the SEC had not substantiated its claim that the tokens sold by sellers other than Binance on exchanges were not securities.
