A federal judge ruled late Friday that the majority 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 toss the SEC’s lawsuit that alleges Binance and its founder and former CEO Changpeng Zhao broke securities laws.
The SEC’s suit filed against Binance in June 2023 accused the exchange and Zhao of artificially inflating its trading volumes, diverting customer funds, failing to restrict U.S. customers from its platform and misleading investors about its market surveillance controls.
The regulator also accused Binance of unlawfully facilitating trading of several crypto tokens the SEC deemed unregistered securities.
The ruling adds to the exchange’s woes after Binance agreed in November to pay $4.3 billion to settle with the Department of Justice and the Commodity Futures Trading Commission over illicit finance breaches.
Still, Friday’s ruling marks a partial victory for the broader cryptocurrency sector as she sided with a previous judge in saying that the SEC had not made its case that secondary sales of Binance’s tokens – sold by sellers other than Binance on exchanges- were not securities.
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