Federal Judge Amy Berman Jackson has ordered an investigation into the classification of cryptoassets as securities.
The ruling comes in the wake of the SEC's case against the Binance exchange and its U.S. division.
The judge's order allows both sides to present their arguments, which will help determine several important aspects:
- The judge intends to assess whether the SEC correctly understands the "Howey test," the legal framework used to determine whether an investment qualifies as a security;
- The decision also questions whether the SEC can use litigation as a tool to regulate the crypto industry;
- Another important point to be clarified is whether crypto-assets, including both primary and secondary sales, fall within the definition of securities;
- The judge will also consider whether staking applies to these assets;
- Finally, the ruling is expected to determine whether an investment contract must include contractual obligations between the parties involved in the transaction.
It is important to note that only one attorney will be allowed to represent the defense side. No specific date has been set for a hearing on the matter at this time.
The SEC filed suit against Binance, #Binance.US and former global exchange head #Changpeng Zhao in early June 2023. Notably, the regulator considers crypto assets with a market capitalization of more than $115 billion to be securities.
Additionally, in November 2023, Binance agreed to pay a $4.3 billion fine to settle disputes with the Department of Justice, the Treasury Department, and the U.S. Commodity Futures Trading Commission. It's worth noting that these are separate cases, and hearings on the #SEC lawsuit have yet to be finalized.
