On January 22, 2024, the U.S. District Court for the District of Columbia held a hearing on Binance's motion to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). This was reported by The Block with reference to court documents.
During the hearing, Binance's legal team criticized the SEC's treatment of cryptocurrencies under the existing regulatory framework. They argued that the regulator takes an inconsistent approach to cryptocurrency companies, both requiring and discouraging registration.
According to court documents, the SEC failed to provide convincing evidence that Binance's tokens and services should be classified as securities.
Representatives of the exchange emphasized that an asset must have a real contract to be considered as such. However, Judge Amy Berman Jackson expressed doubts about the validity of this argument:
"Under the Howey test, an investment contract is a contract, a transaction, or a scheme. One of the three. It does not refer to a contractual transaction or scheme"Jackson observed.
It is worth noting that the judge had previously ordered a hearing to determine whether crypto-assets could be classified as securities. However, the hearing was postponed due to bad weather in the region.
SEC officials disagreed that the agency made contradictory statements. They cited guidance the agency has issued over the years.
"The Howey test gives you a clear answer, and you don't need a regulator to specifically come to you and remind you that you may be violating securities laws"an SEC lawyer said.
The regulator argued that Binance's continued promotion of its business and issuance of #BNB and BUSD tokens created an expectation of profit for token holders.
The Commission argued that the #stablecoin BUSD should be considered a security because it was offered alongside other services that allowed users to earn a return on their assets.
Judge Jackson expressed skepticism about whether the Binance team had correctly interpreted Howey's definition of an investment contract.
Attorney Jeremy Hogan later commented that Binance was in a difficult situation because the judge "implicitly sided with the SEC."
SEC v. Binance Hearing (My) Conclusions:
— Jeremy Hogan (@attorneyjeremy1) January 22, 2024
- Secondary Sales: Binance 👍!
- Fair Notice and Major Questions Doctrine: SEC 👍!
- @cz_binance : CZ 👍!
- Howey Test: SEC 👍!
And, if you hold the BNB token 👎, well, you might want to take a good hard look at the "Sell" button!
"The judge does not believe in Binance's fair notice defense or its arguments regarding the core issues doctrine, and she openly states so"Hogan said.
Recall that #SEC filed a lawsuit against #Binance and its U.S. unit and former CEO #Changpeng Zhao in early June 2023. The regulator accused them of engaging in trading activities without a license.
