Binance continues to face ongoing legal challenges, particularly in the United States. The exchange suffered a major setback in June 2023 when it was hit with a lawsuit from the United States Securities and Exchange Commission (SEC), leading to the termination of over 200 staff as revenues plummeted, according to Christopher Blodgett, the company’s chief operating officer. Now, the SEC is accusing Binance of being uncooperative in providing information about the custody of customer assets, and has requested court intervention to expedite the discovery process.
At the heart of the SEC’s investigation is whether employees of Binance’s non-U.S. division had access to Binance.US customer assets. The SEC alleges that Binance.US has failed to prove that it did not have access to private keys or other means of accessing customer assets. Binance.US has refuted the SEC’s claims, stating that it has complied with the regulator’s extensive requests for information and has requested the court to end the accelerated discovery process.
In a separate development, a U.S. appeals court overturned a ruling that dismissed a class-action lawsuit led by investors against Binance. The lawsuit, filed by Chase Williams in April 2020 on behalf of investors in a similar situation, argues that Binance engaged in the sale of securities without being registered as a securities exchange or broker-dealer. The district court initially dismissed the lawsuit, citing the investors’ claims as untimely based on the relevant statute of limitations. However, the appeals court agrees with the plaintiffs’ argument that Binance is subject to domestic securities laws and that their initial filing was timely.
Meanwhile, the extradition case of Terraform Labs co-founder Do Kwon has taken another turn, with a court in Montenegro overturning a lower court decision to extradite Kwon to the United States. The Appellate Court of Montenegro ruled that the previous order to extradite Kwon was marred by significant violations of local criminal procedure laws. This marks another development in the lengthy extradition process of Kwon, who was arrested in Montenegro in March 2023. Both the U.S. and South Korea have requested Kwon’s extradition, leading to disagreement about where he should be sent.
In a positive development for the crypto industry, the Virginia Senate in the United States passed a groundbreaking bill to establish a workgroup dedicated to studying the crypto ecosystem and making recommendations to support its growth. The workgroup will consist of 13 members, including legislators, representatives from the blockchain industry, and a member representing the local government. The group has until November 1, 2024, to complete its studies and present recommendations to the General Assembly.
On another note, the Spanish Agency for the Protection of Data (AEPD) has ordered Worldcoin to cease collecting and processing data in Spain. The AEPD issued a temporary order banning Worldcoin’s operations for three months as it investigates complaints regarding users’ inability to withdraw consent and the alleged collection of data from minors. This comes shortly after Hong Kong’s Office of the Privacy Commissioner for Personal Data also investigated Worldcoin. The controversy surrounding Worldcoin revolves around its use of biometric scanning devices called “orbs,” which require users to have their eyes scanned for verification purposes.
As the legal battles and regulatory scrutiny continue, the cryptocurrency industry faces a challenging landscape with significant implications for its future.