The SEC’s Argument Against Binance Strengthened by Terraform Ruling
The SEC has presented a new argument in its legal dispute with Binance, drawing on a recent decision involving Terraform Labs. This move aims to bolster the SEC’s case against Binance, specifically regarding the classification of BUSD as a security. The SEC highlighted the court’s ruling in the Terraform case, where cryptocurrencies like UST, LUNA, wLUNA, and MIR were deemed securities based on the Howey test.
The Howey Test and Its Application
The Howey Test is a legal standard established by the U.S. Supreme Court to determine if a transaction qualifies as an “investment contract” and therefore a security. It evaluates whether money is invested in a common enterprise with an expectation of profits. The SEC references this test to argue that BUSD and other offerings like BNB Vault and Simple Earn programs should be classified as securities.
Countering BAM Management’s Motion to Dismiss
The SEC’s mention of the Terraform ruling counters BAM Management’s motion to dismiss the case, which argued that investments in cryptocurrencies like LUNA did not constitute an investment contract. The SEC contends that promoters used funds invested in these tokens for blockchain development or offering yield-bearing returns, benefiting investors based on the promoters’ actions.
Implications for the Binance Case
The recent judgment in the Terraform case provides the SEC with grounds to argue that the Howey test should also apply in the Binance case. The SEC emphasizes that the court’s analysis of Terraform’s UST stablecoin holds relevance when considering Binance’s BUSD and other offerings.
Hot Take: SEC Strengthens Position Against Binance with Terraform Ruling
The SEC’s incorporation of the Terraform ruling strengthens its case against Binance, particularly regarding the classification of BUSD as a security. By referencing the Howey test, the SEC highlights the similarity between cryptocurrencies in both cases and argues for consistent application of securities regulations. This development could have significant implications for Binance and other platforms offering similar digital assets. As the legal battle unfolds, it will be crucial to observe how the court weighs the Terraform ruling and its potential impact on Binance’s offerings.
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