The world’s largest crypto exchange continues to grapple with ongoing legal challenges, particularly in the United States.
Binance continues to grapple with ongoing legal challenges, particularly in the United States. The exchange has already had a “near-mortal blow” after a June 2023 lawsuit from the United States Securities and Exchange Commission (SEC), forcing it to terminate over 200 staff as revenues “imploded,” according to its chief operating officer Christopher Blodgett. Now, the SEC alleges the company is “unable or unwilling” to answer requests for information concerning the custody of customer assets. The regulator has asked the court to intervene to speed up the discovery process.
Central to the SEC’s investigation is whether employees of the non-U.S. arm of Binance maintained access to Binance.US customer assets. The SEC claimed Binance.US has failed to prove that it didn’t have access to private keys or other forms of access to customer assets. In the report, Binance.US pushed back on the SEC’s allegations, saying it had complied with the regulator’s “exceptionally broad” requests for information and asked the court to end the expedited discovery process.
Meanwhile, a U.S. appeals court overturned a ruling that dismissed a class-action lawsuit led by investors against Binance. Chase Williams filed the lawsuit in April 2020 on behalf of investors in a similar situation, arguing that Binance allegedly contracted to sell securities without being registered as a securities exchange or broker-dealer. The district court dismissed the lawsuit, citing the investors’ claims as untimely according to the relevant statute of limitations. However, the appeals court agrees with the plaintiffs’ claims that Binance is subject to domestic securities laws and that their initial filing was timely.
