US Judge Permits Substantial Segment of SEC Lawsuit Against Binance and CZ to Move Forward

US Judge Greenlights Most of SEC Lawsuit Against Binance and CZ


Ruholamin Haqshanas
Last updated:
June 29, 2024, 12:00 EDT
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2 min read


A US court has denied cryptocurrency exchange Binance’s bid to dismiss the bulk of claims brought by the Securities and Exchange Commission (SEC), a significant legal setback for the company.
Judge Amy Berman Jackson’s ruling on June 28 allows allegations concerning Binance’s staking program, the sale of BNB tokens post-ICO, and anti-fraud violations to move forward.
The court also supports the SEC’s argument that former Binance CEO Changpeng “CZ” Zhao functioned as a “control person” and that Binance should have registered under the Exchange Act.
Not a Clear Win for SEC
Nevertheless, the SEC did not secure a complete victory. Judge Jackson dismissed claims related to BNB secondary market sales and transactions involving the Binance USD (BUSD) stablecoin.
She cited a precedent from Judge Analisa Torres’ ruling in the SEC’s case against Ripple to justify dismissing the BNB secondary market sales claim.
The ruling surprised finance lawyer Scott Johnsson, who viewed it as a significant setback for the SEC.
Fox Business reporter Eleanor Terrett predicts that legal teams representing Coinbase, Kraken, and Consensys could leverage this decision in their own cases.
Judge Jackson also rejected SEC claims regarding Binance’s “Simple Earn” passive income feature.
A court hearing is scheduled for July 9 to address further proceedings.
The SEC, under Gary Gensler’s leadership, filed the lawsuit against Binance in June 2023, alleging the exchange offered unregistered securities and operated unlawfully in the US.
In response, Binance and CZ sought to dismiss the lawsuit three months later, arguing the SEC overstepped its authority.
Besides the lawsuit, Binance has encountered regulatory challenges. Seven US states, including Alaska, Florida, Maine, and North Carolina, have either revoked or denied Binance’s money transmitter license renewal.
Additionally, CZ currently serves a four-month prison term for breaching money laundering laws.
Binance Maintains Top Position
Despite legal obstacles, Binance remains the world’s largest cryptocurrency exchange,
with a user base exceeding 200 million
and managing assets worth $100 billion.
In 2022, Binance reported approximately 130 million users. By 2023, it had grown to 170 million, adding 40 million users. Impressively, in the first half of 2024 alone, Binance attracted at least 30 million new users.
In May, India’s Financial Intelligence Unit (FIU-IND) confirmed Binance’s successful registration with the regulatory body, marking its return following regulatory challenges.
Previously, Binance announced obtaining a license from Dubai’s VARA regulator, enabling it to serve retail clients alongside qualified and institutional investors.
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