Binance and Zhao Face Bulk of SEC Charges in Landmark Case
In a significant legal development, a US judge has permitted most of the Securities and Exchange Commission’s (SEC) accusations against Binance, the world’s largest cryptocurrency exchange, and its co-founder, Changpeng “CZ” Zhao, to proceed.
Charges Permitted to Proceed
The SEC lawsuit, filed a year ago, alleges that Binance and Zhao:
- Mishandled customer funds: Failed to properly safeguard and segregate user assets.
- Misled investors and regulators: Provided false and misleading information about operations and compliance.
- Broke securities rules: Offered and sold unregistered securities to US investors.
Out of the initial 13 charges, Judge Amy Berman Jackson of the US District Court for the District of Columbia has ruled that:
- 10 charges will proceed in their entirety, including allegations related to the sale of BNB tokens, a digital asset linked to the Binance ecosystem.
- Two charges will proceed partially, while one charge concerning the sale of a stablecoin called BUSD has been dismissed.
Dismissed Charges
The charges that were dismissed relate to:
- Secondary sales of BNB: Sales of BNB by entities other than Binance.
- Simple Earn program: Allegations that the program allowed investors to earn interest on digital assets without proper registration.
SEC’s Focus on Digital Assets
The SEC, under Chair Gary Gensler, has taken a hardline stance against digital assets, arguing that many tokens should be classified as securities and subject to its oversight.
Gensler believes that crypto exchanges and the digital asset industry have failed to comply with regulations, leading to numerous enforcement actions by the agency.
Ongoing Case
The SEC case against Binance and Zhao represents a major challenge for the cryptocurrency industry. It remains unclear whether digital tokens constitute securities and how regulators will ultimately address the rapidly evolving landscape.
The SEC has scheduled a hearing for July 9 to discuss the next steps in the case. Binance has not yet commented on the judge’s ruling.
Divya 
Mehek