Binance Wins Big in SEC Lawsuit: Major Charges Dismissed

The legal battle between the U.S. SEC and Binance Holdings Limited began on June 5, 2023, when the SEC filed a lawsuit in the District Court for the District of Columbia. Overseen by Judge Amy Berman Jackson with Magistrate Judge Zia M. Faruqui. The case accuses Binance of violations under the Securities Exchange Act focusing on securities and commodities-related issues. 

In a significant development, Judge Amy Berman Jackson recently dismissed several charges against Binance. The charges were also against founder Changpeng Zhao (CZ). The dismissed charges involve secondary market sales of BNB and the Simple Earn program. However, charges related to Binance’s initial token offering and ongoing sales will proceed. 

On July 9, 2024, a crucial scheduling conference was held. Judge Jackson ordered both parties to collaborate and submit a joint proposed schedule by July 29, 2024. This schedule must include deadlines for potential motions to amend the complaint. They might also seek relief from rulings. The schedule must outline the discovery process. The proceedings and timelines are anticipated to involve several motions and orders filed under seal, indicating sensitive information. 

The SEC’s June 2023 lawsuit accuses Binance and CEO Changpeng Zhao of inflating trading volumes. It also accuses them of diverting customer funds. Further, they are charged with failing to block U.S. customers from its platform and misleading investors about market controls. Additionally, the SEC alleges that Binance facilitated the trading of unregistered securities. 

This ruling follows Binance’s recent agreement to pay $4.3 billion to settle charges with the Department of Justice. They also settled charges with the Commodity Futures Trading Commission over illegal finance breaches. Similar allegations have been made against other major crypto exchanges signaling a broad regulatory crackdown on the cryptocurrency industry. 

David Barrera, Co-Founder and CEO of Enumma. He speculates that the SEC might amend its complaint or seek relief from the court’s recent ruling. This indicates a potential shift in its legal strategy.