- A federal judge has dismissed some charges in the SEC vs. Binance case
- Judge Amy Berman Jackson has allowed certain charges relating to BNB to move forward while others remain
- Charges related to secondary BNB sales and Simple Earn were dismissed
In a significant development in the ongoing legal battle between the US Securities and Exchange Commission (SEC) and cryptocurrency exchange Binance, a federal judge has dismissed some of the charges but allowed others to move forward. The decision, made by Judge Amy Berman Jackson of the District Court for the District of Columbia, was announced late Friday and saw charges relating to secondary BNB sales and Simple Earn dismissed while BNB-specific allegations remain.
BNB and BNB Vault Charges Remain
Judge Jackson ruled that several of the SEC’s charges against Binance and its founder, Changpeng Zhao, related to the initial coin offering and ongoing sales of BNB, BNB Vault, and staking services, as well as allegations of failure to register and fraud, can proceed. However, she granted the motion to dismiss charges related to secondary BNB sales and Simple Earn.
The SEC filed the lawsuit last summer, accusing Binance, its US affiliate Binance.US, and Zhao of operating unregistered broker, trading, and clearing services in the US for unregistered digital asset securities. Similar charges have been brought by the SEC against other major crypto entities, including Coinbase, Kraken, Consensys, and MetaMask.
In her order, Judge Jackson noted, “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.'”
This differentiation was crucial in her decision to dismiss the secondary BNB sales claim. Judge Jackson referenced Judge Analisa Torres’ 2023 ruling in the SEC’s case against Ripple Labs, highlighting that the economic reality of the token transactions is a key factor in applying securities law.
SEC is Not Overstepping its Boundaries
Despite this partial dismissal, the SEC has been found to have a plausible claim under most of the charges it filed. Judge Jackson also rejected arguments that the SEC is overstepping its authority under the “major questions doctrine,” a Supreme Court precedent requiring clear congressional authorization for significant regulatory actions. Jackson noted:
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.
Zhao is currently serving a four-month sentence related to a sanctions violation charge from the Department of Justice and the Treasury Department. This SEC case is separate from those criminal charges.
The next hearing in the case is scheduled for July 9.
