SEC Modifies Legal Strategy Against Binance
The US Securities and Exchange Commission (SEC) has taken a strategic step in its lawsuit against Binance by filing a notice of supplemental authority. This notice cites the judgment in SEC v. Terraform Labs as a key precedent, indicating that the SEC aims to leverage this ruling in its case against Binance, Binance.US, and former CEO Changpeng ‘CZ’ Zhao.
The SEC’s argument centers around the interpretation of the “investment contract” definition within the context of cryptocurrency offerings, as established in the Terra case. The SEC believes that the court’s application of the Howey Test to classify certain tokens as investment contracts and securities is directly relevant to the products and services offered by Binance, such as BUSD, BNB Vault, and the Simple Earn program.
By drawing parallels between the Terra case and the Binance lawsuit, the SEC aims to assert that Binance’s digital assets and services fall under securities law, similar to those in the Terra case. The SEC emphasizes that the court should consider this ruling when deciding whether to dismiss Binance’s motion.
Landmark Rulings On The Horizon
This legal maneuver by the SEC highlights its increasing scrutiny over cryptocurrency exchanges and their compliance with US securities laws. In response to the SEC’s allegations, Binance has moved to dismiss the lawsuit, challenging the legal basis for the suit and arguing that it does not apply to their conduct.
The implications of this legal battle extend beyond the courtroom. Brian Shroder, President and CEO of Binance.US, has resigned, with Norman Reed taking over as interim CEO. The company has also announced layoffs affecting about one-third of its workforce. Additionally, Changpeng Zhao has stepped down as CEO and is currently restricted from leaving the United States.
This high-profile case is a significant milestone in the regulatory landscape of cryptocurrencies in the US. The SEC’s reliance on the Terra ruling in the Binance case emphasizes the importance of victories for crypto players in US courts. The outcomes of both the Binance and Coinbase cases, which are set to conclude this year, will shape the future of the crypto industry.
Hot Take: SEC Leverages Precedent to Strengthen Case Against Binance
The SEC’s decision to cite the judgment in SEC v. Terraform Labs as supplemental authority in its lawsuit against Binance showcases a strategic move to bolster its legal strategy. By drawing parallels between the two cases, the SEC aims to establish a precedent that would classify Binance’s digital assets and services as securities under US law. This development highlights the increasing scrutiny faced by cryptocurrency exchanges and their compliance with securities regulations. The outcomes of landmark cases like these will undoubtedly have a significant impact on the future of the crypto landscape, shaping regulatory frameworks and influencing industry practices.
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