Binance Faces Major US SEC Lawsuit, Judge Rules
A federal judge has ruled that the majority of the U.S. Securities and Exchange Commission’s (SEC) lawsuit against Binance, the world’s largest cryptocurrency exchange, can proceed.
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia decided against Binance’s request to dismiss the SEC’s allegations that the exchange and its founder, Changpeng Zhao, violated securities laws.
The SEC’s lawsuit, filed in June 2023, accuses Binance and Zhao of artificially inflating trading volumes, diverting customer funds, failing to restrict U.S. customers, and misleading investors about market surveillance controls. The regulator also claims Binance unlawfully facilitated trading of several crypto tokens deemed unregistered securities.
This ruling adds to Binance’s challenges, following its $4.3 billion settlement with the Department of Justice and the Commodity Futures Trading Commission in November over illicit finance breaches.
However, Friday’s ruling also marks a partial victory for the broader cryptocurrency sector. Judge Jackson sided with a previous ruling that the SEC had not proven that secondary sales of Binance’s tokens – sold by other sellers on exchanges – were securities.
Bitcoin’s price rose on Monday, recovering recent losses, although sentiment towards the broader crypto market remained largely negative. Markets are wary of a potential major liquidation event with the now-defunct exchange Mt Gox set to begin distributions of stolen tokens this week.
Anticipation of further cues on U.S. interest rates from the Federal Reserve and economic data also kept sentiment on edge. Bitcoin rose 4% in the past 24 hours to $63,259 by 00:57 ET (04:57 GMT), partly due to a weakening dollar.
Mt Gox Bitcoin distribution set to begin: Liquidators of Mt Gox announced they will begin distributing Bitcoin stolen during a 2014 hack from early July. Traders speculated that recipients of these tokens would likely sell, given Bitcoin’s massive valuation spike over the past decade. This event could create significant selling pressure and substantial price losses, as seen with steep losses in late June.
Crypto investment products logged two straight weeks of outflows amid fears of selling pressure on Bitcoin. Among broader crypto markets, altcoin prices rose on Monday, recovering some of the steep losses from June. Ether, the world’s second-largest token, jumped 3.7% to $3,490.79 amid speculation that the SEC will approve a spot Ether exchange-traded fund this week.
Other tokens like SOL, XRP, and ADA rose between 1.5% and 8%, despite low trading volumes. Meme tokens DOGE and SHIB also saw over 4% increases each.
Nevertheless, sentiment towards crypto remains cautious ahead of several important updates on U.S. interest rates this week. Federal Reserve Chair Jerome Powell is scheduled to speak on Tuesday, and the minutes of the Fed’s June meeting are due on Wednesday. Additionally, nonfarm payroll data set to release on Friday will provide more clues on interest rates. Traders are increasingly betting that the Fed will cut rates by 25 basis points in September, a notion that offers some support to the crypto market.
