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Binance faces bulk of US SEC cryptocurrency lawsuit, judge rules
(Reuters) – A federal judge ruled on Friday that the bulk of a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Binance, the world’s largest cryptocurrency exchange, can proceed.
The decision by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia deals a blow to Binance, which had asked the court to dismiss the SEC’s lawsuit alleging that Binance and its founder and former CEO Changpeng Zhao violated securities laws.
The SEC’s lawsuit against Binance in June 2023 accused the exchange and Zhao of artificially inflating its trading volumes, siphoning off customer funds, failing to restrict U.S. customers’ access to its platform, and misleading investors about its market surveillance controls.
The regulator also accused Binance of illegally facilitating the trading of several crypto tokens that the SEC considered to be unregistered securities.
The ruling adds to the exchange’s woes after Binance agreed in November to pay $4.3 billion to resolve a settlement with the Justice Department and the Commodity Futures Trading Commission over illicit financial violations.
However, Friday’s ruling marks a partial victory for the broader cryptocurrency industry as it sided with an earlier judge who said the SEC had failed to hold that secondary sales of Binance tokens — sold by sellers other than Binance on exchanges — were not securities.
(Reporting by Gnaneshwar Rajan in Bengaluru and Hannah Lang in Washington; Editing by Diane Craft)