The US Securities and Exchange Commission (SEC) has lodged a motion against Binance, the world’s largest crypto exchange, in the US District Court for the District of Columbia. The motion draws parallels between its actions against Binance, Binance US, and its former CEO and founder, Changpeng Zhao, and the Terraform Labs case, where co-founder Do Kwon faced legal action from the SEC for allegedly conducting unregistered securities offerings and fraudulent activities related to their tokens.
This connection is based on a December 28 ruling by Judge Jed Rakoff, who ruled in favor of the SEC against Terraform Labs. Judge Rakoff’s decision recognized that specific tokens in the Terraform case were securities, primarily because they were investment contracts.
The SEC’s latest filing zeroes in on Binance’s stablecoin BUSD, its staking-as-a-service, BNB vault, and simple earn programs. The SEC contends that this precedent could sway Judge Amy Jackson to reject Binance’s request to dismiss the case.
One of the statements in the motion read: “Plaintiff Securities and Exchange Commission (“SEC “) respectfully submits this Notice of Supplemental Authority to inform the Court of a recent ruling in SEC v. Terraform Labs Pte. Ltd., No. 23-cv-1346 (JSR) (SDNY) (“Terraform”). On December 28, 2023, the Terraform court issued its opinion on cross-motions for summary judgment, resolving in the SEC’s favor a number of issues similar to those that Defendants raise here.”
The cited court decision found that in the Terraform case, defendants illegally offered and sold the stablecoin UST and other crypto assets as unregistered securities without qualifying for exemptions from securities regulations. The SEC alleges that Binance committed similar violations by offering and selling its BUSD stablecoin without proper registrations or exemptions.
Through this motion against Binance, the SEC argues the Terraform ruling supports their charges that Binance unlawfully engaged in the unregistered offers and sales of securities like BUSD.
The Terraform ruling emphasized that securities regulations apply to crypto asset securities regardless of whether the defendant directly sold or resold them on crypto exchanges like Binance.
Overall, the SEC argues this recent judgment supports their position in alleging that Binance, Zhao, and others violated securities laws through unregistered securities offers and sales, false statements, and improper practices. They contend it provides grounds for denying the defendants’ motions to dismiss the SEC’s complaint.
The SEC also claims that Binance continued to allow high-value US customers to trade on its platform. Additionally, Binance US, while claiming independence, was allegedly under Zhao’s secret control.
If Judge Amy Jackson takes a position similar to Rakoff’s Terraform ruling, it could undermine any motion to dismiss by Binance during the case’s progression.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | North America |
| Countries | 🇺🇸 |
| Sentiment | negative |
| Relevance Score | 1 |
| People | Jed Rakoff, Amy Jackson, Do Kwon, Changpeng Zhao |
| Companies | Binance, US Securities and Exchange Commission, Binance US, Terraform Labs Pte. Ltd. |
| Currencies | BNB, ust, BUSD |
| Securities | None |
