US judge has dismissed several core claims by the Securities and Exchange Commission (SEC) in a case against Binance. In a post shared by the cryptocurrency exchange today (Tuesday), Binance noted that the federal judge had dropped multiple important arguments brought by the SEC, strengthening the company's defense in the legal tussle against the watchdog.
SEC's Key Claims Rejected
Specifically, the court's decision dismissed the contention that crypto tokens, including Binance's native BNB and its fiat-backed stablecoin BUSD, could be categorized as securities. Judge Amy Berman Jackson of the United States District Court for the District of Columbia has ruled that these tokens do not meet the criteria for securities, thereby rejecting the SEC's broad assertion.
Additionally, the court dismissed the SEC's claim that secondary market sales of BNB tokens on crypto exchanges constituted securities transactions. Besides that, the court has criticized the SEC's claims that crypto tokens are inherently investment contracts.
In a victory for the industry, a US federal court dismissed several #SEC claims against #Binance, ruling that:1) Crypto tokens are not securities,2) BNB sales on secondary exchanges were not adequately alleged to be securities,3) BUSD is not a security.Read more ⤵️…
— Binance (@binance) July 2, 2024
According to Binance's statement, the ruling mentioned that the focus should be on the circumstances surrounding each transaction rather than the tokens themselves. In the statement, Binance faulted the regulator for failing to provide sufficient evidence that secondary market sales of BNB tokens were conducted with an expectation of profits, a crucial element under the Howey Test for classifying something as a security.
Regarding its native stablecoin BUSD, the court reportedly dismissed the claim that Binance's BUSD is an investment contract. There was no evidence to suggest that BUSD was marketed with an expectation of profit due to Binance's efforts, the exchange added.
Other Claims to Proceed
However, while the court dismissed these claims, it allowed certain aspects, such as the SEC's argument on direct sales of BNB as securities transactions, to proceed. These remaining claims reportedly face significant hurdles for validation, as the SEC must prove that token purchases were made with investment expectations.
Binance has vowed to defend itself against the SEC's regulatory attempts. The company is reportedly advocating for fair and consistent oversight that fosters innovation and growth within the crypto market.
Amid this development, Binance has already restricted certain services to European users to comply with the MiCA regulations. This step occurs as the new cryptocurrency regulations take shape in the region. Some of the affected services include access to copy trading, which the exchange effected on June 26.
This article was written by Jared Kirui at www.financemagnates.com.
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