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U.S. Judge Dismisses Some SEC Charges Against Binance, Allows Others to Proceed
(Originally posted on : Crypto News – iGaming.org )
A portion of the U.S. Securities and Exchange Commission’s (SEC) case against Binance and its founder Changpeng Zhao has been thrown out by a federal judge. Nevertheless, other accusations, like as those directed at the parent business of Binance.US, will continue.
The District Court for the District of Columbia’s Judge Amy Berman Jackson decided on Friday that the SEC’s accusations against Binance regarding the initial coin offering, continuing sales of BNB, BNB Vault, and staking services, as well as the charges related to fraud and failure to register, can proceed. She allowed the motion of Binance and Zhao to drop the accusations against Simple Earn and secondary BNB sales.
The SEC sued Binance, Binance.US, and Zhao last summer, alleging that the exchanges were offering unregistered broker, trading, and clearing services for unregistered digital asset securities in the U.S. Similar charges have been brought against Coinbase, Kraken, and, most recently, Consensys and MetaMask.
Judge’s Rationale
Judge Jackson noted in her order, “The Court finds these observations to be clarifying and persuasive, as the differentiation is consistent with the Supreme Court’s earliest pronouncements concerning the meaning of the term ‘investment contract’ buried within the lengthy list that comprises the definition of a ‘security.’”
Zhao is currently serving a 4-month sentence for a sanctions violation charge brought by the Department of Justice and the Treasury Department. The SEC’s case against him is separate from this criminal charge.
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The judge cited Judge Analisa Torres’ 2023 ruling in the SEC’s case against Ripple Labs in granting Binance’s motion to dismiss the secondary BNB sales claim. She emphasized that the economic reality of the tokens’ transactions mattered to the application of securities law.
Judge Jackson rejected arguments that the SEC can’t bring enforcement actions against crypto entities under the “major questions doctrine,” which states that Congress must direct federal agencies’ authorities when it comes to significant industries. She wrote, “The Court has not been given grounds to find that the industry, while important, has the broad reach that has motivated courts to apply the doctrine to other industries.”
A hearing has been scheduled for July 9.