A federal judge ruled late Friday that the bulk of the lawsuit filed by the U.S. Securities and Exchange Commission against Binance, the world’s largest cryptocurrency exchange, can go ahead.
The ruling from U.S. District Court for the District of Columbia Judge Amy Berman Jackson represents a setback for Binance, which had filed a motion to dismiss the SEC’s case over claims that Binance and its founder and former CEO Changpeng Zhao violated securities laws.
The lawsuit from the SEC in June 2023 against Binance, along with its allegations against Zhao, included artificially inflating trading volumes, diverting customer funds, not restricting U.S. customers from its platform, and misleading investors about its market surveillance controls.
Authorities have also charged that Binance had traded crypto tokens considered unregistered securities by the SEC.
The ruling is a further setback for the bourse, after Binance agreed to pay $4.3 billion in November to settle with the Department of Justice and Commodity Futures Trading Commission over illicit finance breaches.
Nevertheless, Friday’s ruling represents a partial victory for the broader cryptocurrency space, as she sided with an earlier judge who said that the SEC had not made its case that secondary sales of Binance’s tokens—sold by sellers other than Binance on exchanges—are not securities.