Binance Wins Partial Victory as Court Narrows SEC’s Crypto Claims
Binance Ruling Cuts SEC’s Broadest Claims in Half
A federal judge in Washington just handed Binance a partial victory that narrows the SEC’s reach over crypto trading platforms. The decision matters because it signals that not every token on every exchange will automatically be treated as a security, and it limits how far the agency can stretch its enforcement net.
The lawsuit began in June 2023 when the SEC accused Binance Holdings, its U.S. affiliate BAM Trading, and founder Changpeng Zhao of operating an unregistered national securities exchange, offering unregistered securities, and diverting customer funds. The agency’s complaint listed eleven tokens as investment contracts and argued that Binance.US and the global platform both violated the Securities Act by letting U.S. customers trade those assets. Binance fought back, claiming the tokens were commodities or utilities, not securities, and that the SEC lacked authority over its offshore operations.
Judge Amy Berman Jackson ruled that six of the eleven tokens could plausibly be viewed as securities when sold directly by issuers, but she dismissed the SEC’s claim that Binance itself made unregistered offers simply by listing them. She also threw out the agency’s attempt to hold Binance responsible for unregistered broker-dealer activity on its international site for U.S. users, finding the complaint lacked specific facts tying Binance Holdings to domestic conduct. The unregistered-exchange count against Binance.US survived for now, but the court left open whether secondary-market trading of the tokens themselves constitutes an ongoing securities offering.
In plain terms, the judge told the SEC it cannot treat every token listing as an automatic violation; instead, the agency must prove each asset meets the Howey test at the time of sale. That raises the bar for future enforcement actions and gives exchanges a clearer line between what needs registration and what does not.
The ruling shifts power toward platforms and traders by trimming the SEC’s leverage in settlement talks and slowing the agency’s momentum against other large exchanges. It also sharpens the long-running fight over whether secondary sales of tokens are securities transactions, a question that will shape how DeFi protocols, market makers, and stablecoin issuers structure liquidity. Binance escaped the most sweeping liability theories, but still faces trial risk on its U.S. entity and CZ’s personal charges, leaving compliance costs elevated.
Exchanges gain breathing room, yet the core regulatory gray zone remains unsettled until higher courts weigh in.
