US Judge Declines Dismissal of SEC Claims Against Binance

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As a seasoned crypto investor with a keen interest in the regulatory landscape of digital assets, I find the recent court ruling against Binance by the SEC both intriguing and concerning. Having closely followed the developments in this case since its inception, I’ve come to realize that the outcome will significantly impact not just Binance but also the broader crypto community.

A US judge refused to throw out multiple charges filed against Binance by the Securities and Exchange Commission (SEC).

I served as an analyst examining financial regulatory matters. In June 2023, I reported that the Securities and Exchange Commission (SEC) chair, Gary Gensler, initiated a legal action against Binance. He asserted that Binance had been selling unregistered securities and conducting business within U.S. borders without obtaining necessary authorization.

In a court document submitted on June 28, Judge Jackson granted certain allegations for trial while dismissing others. The SEC was given permission to move forward with their accusations regarding Binance’s BNB staking program, potential fraud violations, and the sale of BNB tokens following its initial coin offering (ICO).

The Securities and Exchange Commission (SEC) successfully demonstrated that CZ Zhao, Binance’s founder, held significant control within the company, and that Binance ought to have complied with the Exchange Act by registering.

However, Judge Jackson dismissed the allegations related to the secondary market sale of Binance’s BNB tokens, relying on the similar decision of the SEC in the Ripple case. She also dismissed suggestions concerning the Binance USD (BUSD) stablecoin and the exchange’s Simple Earn passive income tool.

As a crypto investor, I understand that this decision marks a significant development in the ongoing legal dispute regarding the classification of virtual assets. In harmony with past judgments, it underscores the importance of evaluating the economic essence of token sales when applying the Howey Test.

Despite encountering legal issues, Binance continues to lead as the largest cryptocurrency exchange, boasting over 200 million users and managing assets worth over $100 billion. The ongoing case remains a topic of interest as it progresses through the judicial system, with a scheduled court hearing on July 9th.

The decision made by Jackson benefits both Binance and the Securities and Exchange Commission (SEC), carrying potential consequences for the oversight of cryptocurrencies within the US.

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2024-06-29 09:40