SEC Claims Binance Defied U.S. Law — Court Says Not So Fast
The U.S. District Court for the District of Columbia has refused to hand the SEC an easy victory against Binance, keeping the agency’s most ambitious enforcement action alive but exposing cracks in its authority to police crypto globally. In a 54-page opinion issued July 13, 2024, Judge Amy Berman Jackson denied Binance’s motion to dismiss the bulk of the agency’s claims but carved out a critical exception for the BNB token and staking program, ruling that the SEC failed to adequately plead how those products were securities. The decision keeps pressure on Binance’s U.S. operations while giving crypto markets a cautious signal that the agency’s reach has limits when foreign issuers and decentralized tools are involved.
The lawsuit began in June 2023 when the SEC brought a sweeping complaint alleging that Binance Holdings Limited, its U.S. subsidiary Binance.US, and founder Changpeng Zhao had operated an unregistered national securities exchange, broker, and clearing agency. The agency claimed that at least eleven tokens sold on the platform, including SOL, ADA, and BNB, were unregistered securities, and that the company’s earn, staking, and lending programs constituted unregistered investment contracts. Binance responded by challenging the SEC’s jurisdiction over a Cayman Islands entity with little physical presence in America, and by arguing that secondary-market token sales and staking rewards were not securities transactions under the Howey test.
Judge Jackson ruled that the SEC had plausibly pleaded a violation of the Securities Act and the Exchange Act for most products, keeping eleven claims alive while dismissing the claim tied to BNB and the BNB staking program. She accepted the agency’s broad interpretation of what constitutes an “offer” and “sale” of securities in the U.S., finding that Binance’s marketing, website, and app access for American users could qualify as sufficient contacts. However, she also rejected the SEC’s attempt to re<|eos|>