SEC Intends to Amend Complaint in Binance Case

CORRECTION (July 30, 2024, 21:50 UTC): Corrects details to note that the SEC did not say how it intended to amend its complaint or that it intended to drop allegations tied to third-party tokens.
The U.S. Securities and Exchange Commission (SEC) will be amending its ongoing lawsuit against Binance and related entities after a court hearing earlier this month where attorneys raised questions about whether a ruling in the case might affect allegations about certain tokens, according to a court filing early Tuesday morning.
According to the filing, the SEC has already informed the defendants, Binance and affiliated entities (namely Binance.US and founder Changpeng Zhao), that it “intends to seek leave to amend its complaint, including with respect to the ‘Third Party Crypto Asset Securities’… “obviating the need for the Court to issue a ruling as to the sufficiency of the allegations as to those tokens at this time.”
The issue of third party tokens came to a head in a hearing on July 9 when attorneys for Binance said they interpreted Judge Amy Berman Jackson’s June 28 ruling on Binance’s motion to dismiss the SEC’s case as moving third-party tokens out of the case, CoinDesk reported earlier. The Judge made it clear that this was not her intention.
Third-party tokens are digital assets issued by various companies apart from Binance, that were listed by the crypto exchange. The 10 tokens named in the complaint are SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI. The SEC alleged that these tokens are unregistered securities.
Tuesday’s filing was a court ordered joint response to the positions of both sides on how to proceed further. It was expected that the judge would review what role third-party tokens may play in the SEC’s ongoing case against Binance. The SEC did not share further details about how its amended complaint may address the token issue.
This development has resulted in the defense wanting to see the amended complaint before allowing the process of discovery.
“Until defendants have a set of proposed amended allegations in front of them, it is premature and unreasonable for the SEC to expect them to agree to conduct merits discovery for claims on which the SEC may soon seek leave to amend its allegations,” the filing said.
Read More: Opinion: A Second Look at Third-Party Token Allegations in the SEC’s Case Against Binance
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Amitoj Singh is a CoinDesk reporter.