(Reuters) – A federal judge ruled on Friday night that the majority of a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Binance, the world’s largest cryptocurrency exchange, can move forward.
The decision by Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia is a blow to Binance, which had asked the court to dismiss the SEC’s lawsuit alleging that Binance and its founder and former CEO Changpeng Zhao violated securities laws.
The SEC complaint filed against Binance in June 2023 accused the exchange and Zhao of artificially inflating their trading volumes, diverting customer funds, failing to restrict US customers’ access to their platform, and misleading investors about their market surveillance controls.
The regulator also accused Binance of illegally facilitating the trading of several crypto tokens that the SEC deemed unregistered securities.
The ruling adds to the stock market’s woes after Binance agreed in November to pay $4.3 billion to settle with the Department of Justice and the Commodity Futures Trading Commission for illicit financial violations.
Still, Friday’s ruling marks a partial victory for the broader cryptocurrency sector, as it sided with a previous judge in saying the SEC had failed to prove that secondary sales of Binance tokens (sold by sellers other than Binance on exchanges) were not securities.