The U.S. Securities and Exchange Commission (SEC) lawsuit against Binance and its co-founder Changpeng Zhao (CZ) is set to proceed after a Friday ruling. A judge in the U.S. District Court for the District of Columbia gave the green light to 10 out of 13 counts in the SEC lawsuit.
Bloomberg reported that according to Judge Amy Berman Jackson, the lawsuit’s 10 counts can proceed in its entirety, while two counts can proceed partially.
The SEC sued Binance and CZ last year after the exchange signed a plea deal with other regulatory agencies, including the Financial Crimes Enforcement Network (FinCEN) and the Department of Justice (DOJ). The plea deal resulted in a historic fine of $4.3 billion. The SEC even used unsealed Binance and CZ’s plea deals to bolster its claims.
The SEC’s claims against Binance and CZ involve mishandling of customer funds, misleading investors and regulators, and violating securities laws. Binance and CZ have been trying to get the claims dismissed.
Count dismissals
The judge dismissed one count in the lawsuit concerning the sale of stablecoin Binance USD (BUSD). The now-defunct stablecoin faced a regulatory crackdown last year — Paxos, Binance’s BUSD issuing partner stopped minting BUSD in February following action from the New York Department of Financial Services (NYDFS). In November, Binance announced that it would phase out support for BUSD by December 2023.
Part of a dismissed count concerned the secondary sale of BNB, Binance’s native token, by parties other than Binance. BNB has a market cap of over $84 billion with over 147 million tokens in circulation, according to CryptoSlate data.
The judge also dismissed part of a claim relating to Binance’s Simple Earn program, which allows users to earn interest by lending tokens.
The SEC’s lawsuit against Binance is one in a long line of legal actions aimed at establishing cryptocurrencies as securities that fall under the SEC’s jurisdiction. Many in the crypto industry and in Congress, however, have criticized the SEC for overreaching.
In its latest effort, the SEC sued Consensys on Friday, alleging that its MetaMask wallet and its swapping and staking features violate securities laws.
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