Judge Concludes Discovery Phase in Binance vs. SEC Lawsuit

In the ongoing legal battle between Binance and the U.S. Securities and Exchange Commission (SEC), Judge Amy Berman Jackson has issued several minute orders to conclude the discovery phase. 

This development is pivotal in the lawsuit involving Binance, its former CEO Changpeng Zhao, and Binance.US. The district court has dismissed some of the SEC’s securities law violation claims related to sales of BUSD, Simple Earn, and secondary sales of BNB.

Deadlines Set for Remaining Motions

Judge Jackson has instructed both parties to file a joint submission by July 29 detailing the schedule for further proceedings. This submission must include deadlines for any motion to amend the complaint or seek relief from the recent ruling on the motion to dismiss. According to the court order, the submission should also address “whether and how discovery would commence if any motions to amend or for relief are filed, and whether discovery should proceed in phases.”

Additionally, the court docket now includes a minute update on scheduling conference proceedings. This update mandates that Binance and the SEC meet and confer to prepare the joint submission by the court-set deadline.

Partial Victory for Binance Fuels Market Sentiment

The recent court ruling has been seen as a partial victory for Binance, positively influencing the cryptocurrency market. The judge’s decision aligns with the precedent set by Judge Torres, indicating that crypto tokens are not inherently securities. 

Specifically, the court found that sales of BNB on secondary exchanges were not sufficiently alleged to be securities, and it ruled that the stablecoin BUSD is not classified as a security. This decision was partly based on filings from the U.S. Department of Justice in the Mango Markets lawsuit, which contradicted the SEC’s stance on BUSD and other stablecoins.

Despite this partial victory, the court rejected the motion to dismiss by Binance.US. The exchange remains vigilant and prepared for the subsequent phases of the legal process. Following the ruling, the price of BNB saw an increase of 1.38% in the past 24 hours, trading around $524.

Broader Regulatory Context and Reactions

This lawsuit is part of a broader regulatory effort by the U.S. government to closely monitor and regulate the cryptocurrency industry, which has been growing steadily. The SEC’s actions against Binance are similar to crackdowns on other major crypto exchanges like Coinbase and Kraken. The legal battle has sparked various reactions within the crypto community. 

David Barrera, Co-Founder and CEO of Enumma commented on the potential for the SEC to amend its complaint or seek relief from the court’s recent ruling, suggesting that the regulatory body may continue its search for additional evidence to support its case against Binance.

The SEC’s lawsuit, filed last year, accuses Binance and its CEO of several wrongdoings, including diverting customer funds, misleading investors, inflating trading volumes, and failing to prevent U.S. customers from accessing its platform. The SEC also claims that Binance allowed trading financial products that must be correctly registered.