The U.S. Securities and Exchange Commission (SEC) is revisiting its case against crypto exchange Binance, aiming to strengthen its original lawsuit.
What Happened: In a court filing last Thursday, the SEC proposed an amended complaint to address concerns raised by a judge earlier this year and provide further evidence that Binance allegedly engaged in selling unregistered securities, Coindesk reported.
The SEC initially filed its lawsuit against Binance in June 2023, accusing the exchange of operating as an unregistered broker and clearinghouse.
This also included claims of Binance offering unregistered securities through its native BNB BNB/USD token and BUSD BUSD/USD stablecoin.
The lawsuit faced a partial dismissal in June 2024, when Judge Amy Berman Jackson ruled that some charges tied to Binance’s Simple Earn product and secondary BNB sales were not sufficiently supported.
However, the SEC is now seeking to amend its complaint, addressing the judge's concerns and further highlighting how Binance allegedly promoted 10 cryptocurrencies—such as Solana SOL/USD and Cardano ADA/USD—as unregistered securities.
The SEC clarified in its filing, “The MTD Order dismissed these claims based on insufficient factual allegations to meet the Howey test, as opposed to a defective legal theory.”
The proposed amendment alleges that Binance played a central role in promoting digital assets listed on its platform, including its native BNB token.
It states that Binance marketed BNB to investors as an “exchange token,” claiming it was a key part of the exchange’s success and driving up its value.
Furthermore, the SEC accused Binance of compensating U.S. employees with BNB in a manner similar to employee stock options.
In response to Binance's likely opposition to the amendment, the SEC argued that the exchange and its executives have been aware of the allegations since June 2023, and the amended complaint does not introduce new claims that would unduly harm the defendants.
The updated complaint also emphasizes the alleged risks tied to Binance's Simple Earn product and other digital assets, including Solana, Polygon MATIC/USD, and Axie Infinity AXS/USD.
The SEC contends that Binance amplified the promotional activities of the issuers of these tokens, encouraging its customers to invest in them by presenting them as attractive investments.
To further clarify its stance, the SEC addressed its previous use of the term “crypto asset securities” and acknowledged it may have caused confusion.
The agency reiterated that it was not arguing that the crypto assets themselves were securities, but rather that the assets were sold as part of unregistered investment contracts.
This legal battle will likely continue to evolve as Binance is expected to oppose the SEC's motion by Oct. 11.
With high-stakes regulatory scrutiny on crypto exchanges and assets, the industry will be watching closely to see how this case impacts the broader regulatory landscape.
What’s Next: The timing of this legal dispute is notable as Benzinga's Future of Digital Assets event on Nov. 19 is set to explore critical topics around crypto regulation and the evolving digital asset market.
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