Binance Faces Severe Setback: 'Near-Mortal Blow' from SEC Lawsuit and Class-Action Legal Challenges

Binance remains entangled in a web of legal challenges, particularly within the United States. The latest development involves the SEC's assertion that Binance is either "unable or unwilling" to respond to requests for information related to the custody of customer assets, as reported by Cointelegraph. Consequently, the SEC has sought court intervention to expedite the discovery process.

The exchange faced a severe setback in June 2023 when a lawsuit from the United States Securities and Exchange Commission (SEC) dealt what its Chief Operating Officer, Christopher Blodgett, described as a "near-mortal blow." This legal action led to the termination of over 200 staff members as revenues witnessed a significant decline.

At the heart of the SEC's investigation is the question of whether employees in the non-U.S. division of Binance retained access to Binance.US customer assets. The SEC contends that Binance.US has failed to demonstrate that it lacked access to private keys or other means of accessing customer assets. In response, Binance.US refuted the SEC's claims, stating that it had fully complied with the regulator's "exceptionally broad" information requests and urged the court to conclude the expedited discovery process.

Simultaneously, a U.S. appeals court overturned a prior ruling that had dismissed a class-action lawsuit led by investors against Binance. Filed in April 2020 by Chase Williams on behalf of investors facing a similar situation, the lawsuit alleges that Binance engaged in the sale of securities without proper registration as a securities exchange or broker-dealer. Although the district court initially dismissed the lawsuit, citing untimeliness based on the relevant statute of limitations, the appeals court sided with the plaintiffs, recognizing Binance's accountability under domestic securities laws and deeming the initial filing as timely.

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Cointelegraph