(Reuters) – A federal judge ruled late on Friday that most of a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Binance, the world's largest cryptocurrency exchange, can go forward.
The decision by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia deals a blow to Binance, which had asked the court to dismiss the SEC’s lawsuit alleging that Binance and its founder and former CEO, Changpeng Zhao, violated securities laws.
The SEC complaint filed against Binance in June 2023 accused the exchange and Zhao of artificially inflating their trading volumes, diverting customer funds, failing to restrict US customers’ access to their platform, and misleading investors about their market surveillance controls.
The regulator also accused Binance of illegally facilitating the trading of several crypto tokens that the SEC deemed unregistered securities.
The ruling adds to the exchange's woes after Binance agreed in November to pay $4.3 billion to settle with the Justice Department and the Commodity Futures Trading Commission over illicit finance violations.
Still, Friday's ruling marks a partial victory for the broader cryptocurrency sector, as it sided with a previous judge in saying that the SEC had not shown that secondary sales of Binance tokens (sold by sellers other than of Binance on exchanges) were not securities.
