SEC Wins Early Round Against Binance as Case Moves Forward
SEC Scores Early Win Against Binance — Court Keeps Case Alive
The Securities and Exchange Commission just cleared its first big hurdle in the fight against Binance: Judge Amy Berman Jackson refused to throw out the agency’s sprawling lawsuit, ruling that the SEC has plausibly alleged the world’s largest crypto exchange violated U.S. securities laws by offering unregistered tokens and operating without proper registration. The decision keeps Binance’s legal exposure front and center and signals that federal courts are still willing to let the agency test broad theories of crypto-as-security.
The case began last summer when the SEC filed a 13-count complaint accusing Binance Holdings, Binance.US, and founder Changpeng Zhao of selling unregistered securities, operating an unregistered exchange, and mishandling customer funds. Binance moved to dismiss, arguing that the tokens at issue are not securities, that the SEC lacks authority over foreign trading platforms, and that the agency’s interpretation of the law is so vague it violates due process. Judge Jackson rejected those arguments in a 91-page opinion, finding that the SEC had adequately pleaded its claims under the Howey test and that Binance’s alleged U.S. contacts were enough to trigger jurisdiction.
In practical terms, the judge ruled that the SEC can proceed with discovery on most of its claims, including whether BNB, BUSD, and other tokens qualify as investment contracts. She dismissed a few narrow counts tied to specific staking programs but left the core theory intact: if a token is marketed with an expectation of profit derived from the efforts of others, it can be a security regardless of its label or blockchain architecture. Zhao and the companies remain defendants, and the case now heads into evidence-gathering.
The ruling underscores that judges are not yet ready to clip the SEC’s wings in crypto cases. By letting the agency’s expansive view of “investment contract” survive, the court effectively preserves the agency’s leverage to push exchanges toward registration or settlement. It also keeps the spotlight on secondary-market trading of tokens that the SEC has labeled securities, a stance that could ripple through DeFi protocols and market-makers who list those assets.
For traders and platforms, the decision raises the stakes of U.S. exposure. Any exchange or DeFi front-end that courts determine targeted American customers could face similar suits, forcing tough choices between geoblocking, licensing, or litigation. Meanwhile, the SEC’s win-by-not-losing keeps enforcement momentum alive even as Chair Gensler’s term winds down and lawmakers debate new crypto legislation.
The Binance case is now a live grenade under every U.S.-facing trading venue: if the agency can prove its facts, the cost of non-compliance just went up.
