Binance US Prepares for Legal Showdown with SEC Amid Regulatory Dispute
Binance US, the American branch of global cryptocurrency exchange Binance, is bracing for a legal showdown with the Securities and Exchange Commission (SEC) as the regulatory dispute escalates.
SEC Allegations and Binance US’s Response
In a recent post on X, Binance US, which was specifically established to cater to U.S. customers and comply with local rules and regulations, stated it is prepared to fight the SEC’s allegations in court. The SEC has accused Binance US of violating securities laws by offering unregistered investment products and engaging in anti-fraud breaches.
“On Friday, the Court decided that the SEC’s case against Binance.US will continue. We were prepared for this and look forward to having this case move forward in the judicial process”, the platform wrote.
Binance US Asserts 1:1 Reserves for All User Assets
In its post, Binance US emphasized that it maintains 1:1 reserves for all customer assets and implements robust compliance and risk programs to ensure platform security and integrity.
“We have always utilized the limited guidance that the SEC has offered to the crypto industry to operate our business in a compliant way”, the exchange added.
However, Binance US criticized the SEC’s regulatory approach, characterizing it as “regulation by enforcement”. The exchange suggested that the challenges it faces are driven by politically motivated actions under the current leadership of Chair Gary Gensler.
Legal Proceedings and Court Rulings
Despite its confidence in its legal standing, Binance US has been unable to convince a U.S. court to dismiss most of the SEC’s claims against it. The court filing on June 28 upheld the SEC’s allegation that Binance CEO Changpeng “CZ” Zhao acted as a “control person,” a significant blow to Binance’s attempts to have the claim dismissed.
Judge Amy Berman Jackson also ruled that claims related to Binance’s staking program, the sale of BNB tokens following its initial coin offering, and anti-fraud violations will proceed. However, the ruling wasn’t a complete victory for the SEC. Judge Jackson decided to dismiss claims relating to BNB secondary market sales and all sales associated with the Binance USD (BUSD) stablecoin.
In her decision, she referred to Judge Analisa Torres’ ruling in the SEC’s case against Ripple as supporting grounds for dismissing the SEC’s claim regarding BNB secondary market sales.
Binance’s Continued Dominance
Despite these legal hurdles, Binance continues to hold its position as the world’s largest cryptocurrency exchange, boasting over 200 million users and managing assets totaling $100 billion. Just two years ago, in 2022, Binance reported a user base of around 130 million. By 2023, the exchange had added 40 million more users, bringing the total count to 170 million. Impressively, in the first half of 2024 alone, Binance has already added at least 30 million new users.
In May, the Financial Intelligence Unit of India (FIU-IND) revealed that Binance has successfully registered with the regulatory body, returning to the country after some regulatory hurdles. Prior to that, the exchange announced that it had obtained a license from Dubai’s regulator, VARA, enabling the platform to cater to retail clients along with qualified and institutional ones.
As Binance US prepares for its legal battle with the SEC, the outcome will undoubtedly have significant implications for the cryptocurrency industry and regulatory landscape in the United States.
