SEC Wins Round Against Binance as Judge Lets Case Move Forward
SEC WINS FIRST ROUND AGAINST BINANCE IN D.C. COURT
The Securities and Exchange Commission scored a procedural victory that keeps its sweeping enforcement case alive against Binance, the world’s largest crypto exchange, after Judge Amy Berman Jackson refused to throw out the lawsuit in a 52-page order issued Tuesday. The ruling means the SEC can continue pressing claims that Binance and its founder Changpeng Zhao operated an unregistered securities exchange, commingled customer funds, and sold unregistered tokens—claims that could reshape how digital assets are classified and traded in the United States.
The lawsuit began in June 2023 when the SEC filed a 13-count complaint alleging that Binance’s U.S. platform, Binance.US, was used to evade registration requirements and that the parent company offered unregistered securities such as BNB, BUSD, and staking products. Binance moved to dismiss most of the counts, arguing the tokens were not securities under the Howey test and that the SEC lacked authority to regulate them. Judge Jackson’s opinion rejected those arguments at the motion-to-dismiss stage, holding that the SEC had plausibly alleged an investment contract and that the court must accept those allegations as true for now.
On the central legal question—whether crypto tokens and staking programs can qualify as investment contracts—the court sided with the SEC’s broad reading of precedent, finding that purchasers of BNB and staking services reasonably expected profits derived from Binance’s efforts. The judge dismissed a handful of peripheral claims against Binance.US but preserved the heart of the case, including the unregistered-exchange and unregistered-securities counts that threaten billions in potential liability and could force structural changes to how global exchanges serve U.S. customers.
The decision signals that federal courts are willing to let the SEC test its expansive theory of crypto jurisdiction, at least through discovery and potentially to trial. While the ruling is not a final determination of liability, it shifts settlement leverage toward the agency and raises the specter of additional enforcement actions against other platforms that list similar tokens or offer staking. Exchanges now face heightened due-diligence costs and may accelerate delistings of tokens that could be deemed securities, while traders confront the prospect of reduced liquidity and market fragmentation between compliant and offshore venues.
For crypto markets, the order underscores the SEC’s continued upper hand in the regulatory turf war with the CFTC and reinforces the view that most altcoins and staking arrangements carry enforcement risk until Congress intervenes or higher courts narrow the agency’s reach.
