SEC Smacks Binance With Partial Win in D.C. Court
The Securities and Exchange Commission just scored a tactical victory against the world’s largest crypto exchange. In a sweeping 83-page opinion, Judge Amy Berman Jackson green-lit most of the agency’s claims that Binance and its founder Changpeng Zhao sold unregistered securities and operated an unlicensed exchange. The ruling keeps Binance under the regulatory gun and signals that U.S. courts are still willing to treat many digital tokens as securities.
The fight began in June 2023 when the SEC sued Binance Holdings Limited, its U.S. affiliate Binance.US, and Zhao for allegedly offering unregistered securities through dozens of tokens, running an unregistered national securities exchange, and mishandling customer funds. Binance moved to dismiss, arguing that the tokens were not securities, that the exchange was offshore, and that the Commission lacked jurisdiction over foreign actors. Judge Jackson rejected most of those arguments. She held that the SEC plausibly alleged the tokens were investment contracts under the Howey test because investors bought them expecting profits derived from Binance’s managerial efforts. The court also found enough facts to support claims that Binance operated a securities exchange inside the United States by targeting U.S. customers and providing them trading services.
The only clear win for Binance came on the SEC’s attempt to label BNB—the exchange’s native token—as a security when sold on secondary markets; that narrow slice of the complaint was dismissed. Everything else stays: the unregistered-exchange claim, the unregistered-broker-dealer claim, and the charges tied to Simple Earn and other staking products. Zhao personally remains on the hook for aiding-and-abetting liability. With the motion-to-dismiss stage over, the case now shifts to discovery and potential settlement talks.
In plain terms, the court told Binance and the broader industry that simply incorporating offshore does not create a regulatory force field. If a platform solicits U.S. users and offers tokens whose value hinges on the promoter’s promises, regulators can reach it. The decision also keeps the SEC’s expansive view of “investment contract” intact, meaning tokens that promise staking yields or ecosystem growth funded by company efforts are likely to stay in the agency’s crosshairs.
For crypto markets the ruling tightens the vise on centralized exchanges and pushes trading volume toward offshore or decentralized venues that can credibly claim they do not target U.S. persons. Stablecoins and liquid staking tokens now face fresh classification risk; any promise of yield tied to a central party could trigger registration obligations. DeFi protocols may feel short-term relief only if they avoid U.S. front-ends and marketing, but the opinion leaves the door open for future enforcement if those lines are crossed. Traders should expect continued compliance friction and possible delistings as exchanges scrub tokens that look like securities.
The message is blunt: until Congress draws clearer lines, judges will keep letting the SEC treat most exchange-listed tokens as securities.