A US Judge Ruled That 10 of 13 Charges in a Lawsuit Against Binance and Its Former CEO Changpeng Zhao Can Proceed
- WBOYOriginal
- 2024-07-02 06:40:491083browse
There was at least some good news for Binance, however, with Judge Jackson ruling that three dismissal requests from the company had been successful.
A US judge has ruled that 10 of 13 charges in a Securities and Exchange Commission (SEC) lawsuit against Binance and its former CEO Changpeng Zhao can proceed while the remaining three can be wholly or partially dismissed.
The SEC last year accused Binance, Binance US, and Zhao of mishandling customer funds, wash-trading tokens, and using Binance US as a regulatory distraction, prompting the exchange to file a motion to dismiss the charges.
The exchange argued that the digital asset industry wasn’t given fair notice of the SEC’s impending enforcement efforts and that they would constitute a ‘power grab.’
However, Judge Amy Berman Jackson refused the request, pointing out that the SEC’s enforcement doesn’t reflect ‘enormous and transformative’ regulatory authority that’s enacted without congressional approval.
She added that the crypto industry has been on notice since the SEC warned firms to comply with its federal securities laws, finding “no violation of due process or lack of fair notice.”
There was at least some good news for Binance, however, with Judge Jackson ruling that three dismissal requests from the company had been successful.
Specifically, she ruled that a charge relating to the sale of the stablecoin BUSD should be removed in its entirety as the SEC’s allegations “do not align with the prongs of the Howey test.”
She also partially scrapped two charges relating to Binance’s Simple Earn token interest program and its BNB token.
Jackson ruled that the SEC’s description of Simple Earn as a security “does not fit the rubric for an investment contract,” and that allegations regarding the secondary selling of BNB by other third parties should be dropped.
She also maintained that the SEC “plausibly alleges that Binance offered and sold BNB as an investment contract.”
“The SEC asks the Court to rule whether defendants’ crypto assets are ‘securities’ within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, an application of enforcement powers that the agency has exercised since at least 1946,” she said.
The next hearing is scheduled for July 9. Zhao remains in prison, serving a four-month sentence on separate charges.
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