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In the latest development in the Binance SEC lawsuit, the U.S. District Court for the District of Columbia has issued a major order. The latest order concerns the claims related to exchange’s tokens BNB and BUSD. This order follows the SEC’s allegations of securities law violations, including unregistered sales of BNB and improper handling of customer funds through BUSD.
Latest Court Order in Binance SEC Lawsuit
In the Binance SEC lawsuit, the court has clarified that it will allow the SEC’s claims regarding the initial coin offering (ICO) of the crypto exchange’s native token, BNB, and the ongoing sales of BNB after the ICO to proceed. In its decision, the court stated, “The portions of Count One against Binance relating to the initial coin offering of BNB and Binance’s ongoing sales of BNB after the ICO are proceeding pursuant to the Court’s June 28, 2024 Memorandum Opinion and Order.”
The latest order allows the SEC to continue its investigation into whether Binance violated securities regulations by failing to register BNB as a security. Additionally, the court is moving forward with other claims related to BNB and exchange’s operation as the Binance SEC lawsuit progresses.
The court noted that “the claim against Binance in Count Three regarding BNB Vault” will also proceed, alongside claims against the exchange and its US-based affiliate, BAM Trading, for failing to register under the Securities Exchange Act. The decision highlights the importance of ensuring that Binance’s business practices comply with U.S. securities laws, particularly in its dealings with U.S. investors.
Dismissal of Claims Regarding BUSD
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However, the court did not allow the SEC’s claims concerning BUSD, Binance’s stablecoin, to move forward at this stage. Count Two of the regulatory agency’s complaint in the Binance SEC lawsuit, which targeted BUSD, was excluded from discovery.
The court clarified that fact discovery “may NOT embark on the allegations in Count Two, concerning BUSD,” signifying a partial victory for the exchange. The ruling also limited other claims, including those related to Binance’s Employee Stock Token Options Plan, as the court deemed these allegations insufficient to proceed at this time.
The court’s order pointedly addressed disagreements between the SEC and Binance regarding the scope of discovery. The SEC had pushed for broader discovery on claims not explicitly dismissed, but the court rebuked this approach.
They stated, “It was a waste of the Court’s time and resources to be forced to parse this sort of lawyer-like posturing.” The judge made it clear that the case’s discovery process should be managed efficiently, warning both parties to avoid unnecessary legal maneuvering.
As the Bianance SEC lawsuit moves forward, both Binance and the SEC will have to adhere to a scheduling order, and any further discovery disputes will be referred to Magistrate Judge Zia M. Faruqui. The judge emphasized that counsel should confer in good faith to resolve issues before escalating them to the court.