- Binance.US wins a significant legal battle against the Florida Office of Financial Regulation’s Emergency Suspension Order (ESO).
- The court found procedural errors and misinterpretations in the ESO.
- Binance and its CEO, Changpeng Zhao, continue to face regulatory challenges in the United States.
Binance.US Triumphs Over Florida’s Emergency Suspension Order
Court Rules in Favor of Binance.US
The First District Court of Appeal for the State of Florida ruled on May 22 that plea deals involving Changpeng Zhao and Binance Holdings for not complying with Anti-Money Laundering (AML) and Bank Secrecy Act are not enough to block Binance.US from operating in the state. The court stated that the Florida Office of Financial Regulation (OFR) never backed up a conclusion of law that Zhao’s conduct constituted grounds for suspending the license of the company’s Florida affiliate Binance.US because Zhao’s conduct allegedly “constituted an immediate danger to the public health, safety, and welfare necessitating an emergency suspension.”
Procedural Errors and Misinterpretations
On November 29, 2023, OFR issued an emergency suspension order (ESO) to suspend the money-services business license of Binance.US and directed the exchange to cease and desist from engaging in money transmission activity. The court analysis revealed that “The ESO contains a material error in procedure and an erroneous interpretation of sections 560.114(2) and 120.60(6), Florida Statutes.” The ESO also failed to discuss alternative remedies rather than suspension of the license, which threatens significant financial losses.
Binance Faces Challenges in the US
Binance’s subsidiary Binance.US saw a severe drop in trading volumes amid a number of challenges including money transmitter license suspension and heightened scrutiny from regulators. The Binance vs SEC lawsuit is in the discovery and deposition phase, with parties resolving disputes related to an earlier consent order by the court.
Regulatory Scrutiny and Legal Battles
Recently, a significant development has emerged in favor of Binance as it leverages key details in the United States v. Eisenberg lawsuit to negate the U.S. SEC’s position on stablecoins that BUSD and USDC are unregistered securities. An exhibit in the US DOJ filing states that USDC stablecoin is not a security as it doesn’t pass the Howey test. “But there is no factual basis for treating USDC as a security or putting that question to the jury. A core component of a security is that the holders of the security ‘expect profits’ from the efforts of others,” as per DOJ filing.
Conclusion
The recent court ruling in favor of Binance.US marks a significant victory for the crypto exchange amid ongoing regulatory scrutiny in the United States. While the court identified procedural errors and misinterpretations in the ESO, Binance and its CEO, Changpeng Zhao, continue to navigate a complex legal landscape. The outcome of these legal battles will be crucial for Binance’s operations and the broader crypto market in the US.
