WASHINGTON, Thursday, July 4, 2024 – A federal judge ruled late Friday June 28 that Binance, the world’s largest cryptocurrency exchange, must face most of a lawsuit filed by the US Securities and Exchange Commission (SEC).
The lawsuit alleges that Binance and its founder, Changpeng Zhao, violated securities laws through activities like artificially inflating trading volumes and misleading investors about market surveillance.
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia dismissed a portion of the SEC’s case that focused on secondary trading of Binance’s native token, BNB.
However, the judge allowed accusations related to the initial coin offering and ongoing sales of BNB, as well as charges against Binance’s staking scheme and claims of anti-fraud violations, to proceed.
The SEC’s June 2023 lawsuit accuses Binance and Zhao of inflating trading volumes, diverting customer funds, misleading investors, and facilitating unregistered securities trading.
Despite this, the judge sided with a previous ruling that secondary sales of Binance’s tokens were not securities.
This decision follows Binance’s $4.3 billion settlement with the Department of Justice and the Commodity Futures Trading Commission over illicit finance breaches last November.
The judge also ruled that charges against Binance founder Changpeng Zhao, in his capacity as a “control person” for the exchange, would remain part of the ongoing case.
Binance has previously stated it “limited guidance” from the SEC regarding regulations in the cryptocurrency space. The exchange has also expressed its intention to fight the remaining charges in court.
The Lawsuit nby SEC against Binance can be read here.