Yahoo Finance Bulk of SEC Case Against Binance, Zhao Can Proceed, Judge Rules
(Bloomberg) -- The bulk of a Securities and Exchange Commission lawsuit against Binance, the world’s largest crypto exchange, and its co-founder Changpeng “CZ” Zhao can proceed, a US judge ruled.
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The SEC sued Binance and Zhao a year ago for mishandling customer funds, misleading investors and regulators, and breaking securities rules. The defendants contested the claims and asked for the case to be dismissed.
Out of 13 counts, 10 will proceed in their entirety and two partially, while one is dismissed, according to an order late Friday by Amy Berman Jackson, a judge in the US District Court for the District of Columbia.
The count that was dismissed concerns sales of BUSD, a stablecoin that is now practically defunct following a regulatory crackdown. Stablecoins are typically pegged to a fiat currency like the US dollar and backed by cash and bonds.
BNB Sales
Part of a count concerning sales of BNB, a token linked to the Binance ecosystem, was also tossed. The portion dismissed relates to secondary sales of BNB by parties other than Binance. BNB has a market value of about $87 billion and ranks as the fourth-largest digital asset, according to CoinGecko.
An allegation of illegality over a program called Simple Earn was also dismissed, but the rest of the related count proceeds. Simple Earn enables investors to lend tokens and earn interest.
Binance didn’t immediately respond to a request for comment sent outside regular business hours.
The exchange in November was hit with a landmark $4.3 billion penalty in a plea deal with the Justice Department and US regulators over violations of US anti-money laundering and sanctions laws. Billionaire Zhao was subsequently sentenced to four months in jail. The SEC wasn’t part of the plea agreement.
Gensler’s Stance
The SEC under Chair Gary Gensler argues most digital tokens are unregistered securities that should be subject to its oversight. Gensler is highly critical of crypto exchanges and the digital-asset industry for alleged noncompliance.
But a series of SEC lawsuits to enforce its position have failed to settle the question of whether digital tokens are securities. Clarifying legislation from Congress remains pending and the industry accuses the regulator of overreach.
The latest SEC legal action emerged Friday, when the agency alleged that crypto firm Consensys Software Inc. broke rules by failing to register as a brokerage and improperly collecting millions of dollars in fees. The company disputed the SEC’s claims.
The case presided over by Jackson is SEC v. Binance, 23-cv-01599, US District Court, District of Columbia (Washington, DC).
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