The U.S. District Court for the District of Columbia has issued an order in the SEC’s case against Binance and its founder Changpeng Zhao. The court allowed most claims to proceed, including those related to unregistered crypto sales and fraudulent practices, while dismissing some claims related to BUSD and secondary BNB sales.
SEC's Case Against Binance Moves Forward With Major Allegations Intact
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Some Charges Against Binance Dismissed
The U.S. District Court for the District of Columbia issued an order on Friday concerning the case filed by the U.S. Securities and Exchange Commission (SEC) against Binance Holdings Ltd., its founder Changpeng Zhao (CZ), and two affiliated U.S. entities — BAM Trading Services Inc. and BAM Management US Holdings Inc. — for alleged violations of federal securities laws.
The SEC accuses Binance and its affiliates of offering and selling crypto assets without proper registration, operating crypto trading platforms without the necessary registration as an exchange, broker-dealer, or clearing agency, and making false statements to investors while engaging in fraudulent activities. The defendants have sought to dismiss the complaint, which focuses on five specific crypto assets and programs: BNB, BUSD, Binance’s Simple Earn, Binance’s BNB Vault, and BAM Trading’s Staking Program.
The court order states:
The bulk of this action will move forward, but the motions to dismiss will be granted in part and denied in part.
Specifically, the charges against Binance for offering and selling BUSD without a registration statement, the claim related to secondary sales of BNB by other sellers, and the claim regarding Binance’s Simple Earn program without a registration statement have been dismissed.
However, the court upheld the claims against Binance for the initial coin offering ( ICO) and ongoing sales of BNB without a registration statement (excluding secondary sales by other sellers), the BNB Vault program without a registration statement, BAM Trading for offering and selling its Staking Program without a registration statement, Binance for operating the Binance.com platform without registering as an exchange, broker-dealer, or clearing agency, and Binance and BAM Trading for operating the Binance.US platform without registering as an exchange, broker, and clearing agency.
Additionally, the court allowed the claims to proceed against Zhao for violating the Exchange Act as a control person over Binance in connection with the Binance.com platform and over Binance and BAM Trading concerning the Binance.US platform. The court also permitted the claims against BAM Management and BAM Trading for violating anti-fraud provisions by making materially false and misleading statements to investors and engaging in fraudulent practices.
What are your thoughts on the court’s decision to allow most SEC claims against crypto trading platform Binance and its founder Changpeng Zhao to proceed? Let us know in the comments section below.
