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ExchangeRegulation 2 min

Court Allows Most SEC Claims to Proceed in Binance Lawsuit

In a decisive move impacting the cryptocurrency landscape, Binance has mandated the conversion of 15 digital tokens into USDT (Tether), signaling a significant shift towards streamlining its trading assets. This directive affects a specific set of tokens, including Moeda Loyalty Points (MDA), Helium (HNT), Mithril (MITH), among others, with users being given a deadline until April 21 to withdraw these tokens. Post-deadline, the affected tokens will no longer be eligible for withdrawal, pushing towards a consolidated trading environment on Binance. Strategic Reduction in Token Diversity The conversion process is set to simplify the trading ecosystem on Binance, reducing the diversity of tokens available for direct trading but enhancing liquidity and focus on the remaining assets. Binance has committed to keeping users informed through updates and direct email notifications once the conversion process is complete, ensuring a transparent transition for all impacted parties. Adjusting to Blockchain Preferences: The USDC and Tron Network Update Additionally, Binance has announced a cessation of support for USDC deposits and withdrawals on the Tron network (TRC20), effective after April 5. This change aligns with Circle’s recent decision to discontinue its support for the Tron network, though the reasons behind this decision remain unspecified. The trading of USDC on Binance, however, will not be affected by this update. Users affected by the TRC20 discontinuation are advised to transfer their funds to supported blockchains or convert them into fiat currency as per their preference. Despite the halt on new USDC stablecoin issuances on Tron, Circle has indicated that it will maintain USDC operations on the network until February 2025, providing a lengthy transition period for users and stakeholders.

In a significant legal development, a U.S. court has allowed most of the claims made by the Securities and Exchange Commission (SEC) against Binance to proceed. This decision came despite Binance’s efforts to dismiss the majority of the allegations. However, the court did dismiss some specific claims related to secondary market sales of Binance Coin (BNB) and sales of the Binance USD (BUSD) stablecoin.

Key Court Decisions

On June 28, Judge Amy Berman Jackson ruled that claims related to Binance’s staking program, the sale of BNB following its initial coin offering, and anti-fraud violations would move forward. The SEC’s assertion that former Binance CEO Changpeng ‘CZ’ Zhao acted as a “control person” and that Binance was obligated to register under the Exchange Act were also upheld.

Dismissed Claims

However, Judge Jackson dismissed the SEC’s claims concerning BNB’s secondary market sales and all transactions involving BUSD. She referenced Judge Analisa Torres’ ruling in the SEC’s case against Ripple as a precedent for her decision to dismiss these specific claims. This dismissal was seen as a setback for the SEC, with finance lawyer Scott Johnsson describing it as a “big loss” for the regulator.

The SEC filed a lawsuit against Binance and CZ in June 2023, accusing them of offering the sale of unregistered securities and operating illegally within the United States. In response, Binance and CZ sought to have the lawsuit dismissed, arguing that the SEC had overstepped its legal authority.

Also Read: Binance Enforces Stricter Measures Against Account Misuse

Impact on Binance

Despite the ongoing legal battles, Binance remains the largest cryptocurrency exchange globally, boasting over 200 million users and managing $100 billion in assets. The exchange continues to face regulatory challenges, with seven U.S. states, including Alaska, Florida, Maine, and North Carolina, either revoking or refusing to renew its money transmitter license. Additionally, CZ is currently serving a four-month prison sentence for violating money laundering laws.

A court hearing is scheduled for July 9, where further proceedings regarding the SEC’s claims will take place. This ongoing legal scrutiny highlights the complex regulatory landscape that major cryptocurrency exchanges like Binance navigate.

Adam L

In the world of blockchain and cryptocurrencies, I have a great deal of passion and interest. My interest in blockchain and cryptocurrencies has led me to explore these technologies in greater depth, as I am interested in the potential implications they could have on the global economy.

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