The SEC Leverages Terraform Labs Case in Lawsuits Against Binance and Coinbase
The Securities and Exchange Commission (SEC) is using its partial victory in the Terraform Labs court case to strengthen its ongoing lawsuits against two major cryptocurrency exchanges, Binance and Coinbase.
In a recent filing related to its case against Coinbase, the SEC submitted the court ruling from the Terraform Labs case, which determined that UST, LUNA, wLUNA, and MIR tokens are securities. The SEC aims to use this ruling to support its opposition to a motion filed by Coinbase.
The SEC argues that investors reasonably expected the value of their investments to increase based on the issuer’s plan to develop and maintain the asset’s value. However, the specific tokens mentioned in the Terraform Labs case are not included in the SEC’s complaint against Coinbase.
Utilizing Terraform Labs Ruling in the Binance Case
In a parallel lawsuit against Binance, the SEC is also seeking to use the Terraform Labs judgment as evidence. The agency has asked a D.C. court to consider this ruling while reviewing Binance’s motions to dismiss the case.
The SEC highlights similarities between Terraform Labs’ arguments and those put forward by Binance. Both companies attempted to separate selling tokens from developing and promoting protocols where those tokens could generate profits. The SEC contends that this supports its argument against dismissing the case.
While Binance recently settled criminal charges with the Department of Justice, its lawsuit with the SEC regarding alleged operation of an unregistered securities exchange remains ongoing. Binance has filed multiple motions to dismiss the case since being sued by the SEC in June.
Hot Take: SEC Strengthens Its Cases Against Major Crypto Exchanges
The recent leveraging of the Terraform Labs court ruling by the SEC in its lawsuits against Binance and Coinbase demonstrates the agency’s determination to regulate the crypto industry. By using this ruling as evidence, the SEC aims to establish that certain tokens are securities and should fall under its jurisdiction. This move could have significant implications for how exchanges operate and offer certain tokens to investors.
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