In an order late Friday, Judge Amy Berman Jackson of the District of Columbia Court ruled that the SEC’s charges against Binance relating to its initial coin offering and ongoing sales of BNB, BNB Vault, staking services, failure to register, and fraud allegations can proceed. The judge granted Binance and Zhao’s motion to dismiss the charges related to the secondary sale of BNB and Simple Earn.
The SEC sued Binance. Binance Last summer, Bitcoin Exchange CEOs John F. Kennedy and Chao Kennedy sued the exchange for providing unregistered brokerage, trading and settlement services for digital asset securities in the U.S. Regulators have also filed similar charges against Coinbase, Kraken and, as of Friday morning, ConsenSys and MetaMask.
The SEC made plausible allegations in most of the complaint it filed, Judge Jackson wrote in Friday’s order.
“The Court notes that several district courts facing SEC enforcement actions regarding virtual currencies have struggled to distinguish between the alleged investment contracts and the tokens themselves,” she wrote. “…The Court finds these views clear and persuasive because the distinction is consistent with the Supreme Court’s earliest decisions regarding the meaning of the term ‘investment contract,’ which is buried within the long list that constitutes the definition of ‘security.'”
Zhao is currently serving a four-month sentence for violating sanctions brought by the Departments of Justice and Treasury. The SEC’s case against him is separate from the criminal charges.
In granting Binance’s motion to dismiss the secondary BNB sales claims, the judge cited Judge Analisa Torres’ 2023 ruling in the SEC’s case against Ripple Labs, saying the economic realities of token trading are important in the application of securities laws.
Like other judges, Judge Jackson found that the SECKey Questions DoctrineThere is a Supreme Court precedent that states, “Congress must direct the authority of federal agencies with respect to critical industries.”
“While this industry is important, the Court has not been given any basis to find that it has broader effects that would motivate the Court to apply the principle to other industries,” the justices wrote Friday.
The judge scheduled a hearing for July 9.
