As a seasoned researcher with a keen interest in the dynamic world of cryptocurrencies and their regulatory landscape, I find myself intrigued by the ongoing saga between Binance and the US Securities and Exchange Commission (SEC). Having closely followed similar legal battles, such as Ripple’s case, it appears that Binance is adopting a strategy to challenge the SEC’s broad interpretation of securities laws.
Binance continues its battle against the United States securities regulator amid allegations of violations related to certain cryptocurrencies.
In simpler terms, Binance and its ex-CEO, CZ Zhao, have submitted a request asking the U.S. Securities and Exchange Commission (SEC) to throw out their updated lawsuit against them.
On November 4th, legal representatives for Binance and CZ petitioned the court to discard the Securities and Exchange Commission’s (SEC) recent amendment to its lawsuit, which aims to challenge tokens like Axie Infinity Shards (AXS).
In September, the amended SEC complaint has expanded its focus to include the tokens of Filecoin (FIL), Cosmos’ ATOM (ATOM), The Sandbox’s SAND (SAND), and Decentraland’s MANA (MANA).
SEC’s amended claims “fail as a matter of law”
Recently, Binance’s lawyers have put forward an argument stating that the court accurately dismissed the Securities and Exchange Commission’s (SEC) first proposal of classifying cryptocurrency assets as investment contracts.
Through this action, the court confirmed that cryptocurrencies may constitute investments and that every individual transaction needs to adhere to the specific regulations governing securities.
As reported by the lawyers, the updated SEC complaint appears to pay mere respect or acknowledgement to the court’s decision that cryptocurrencies aren’t inherently classified as “securities,” yet it fails to embrace the logical implication of this ruling.
“Secondary market resales of the assets long after they were first distributed by their developers are not ‘securities’ transactions.”
Rather than suggesting otherwise, the SEC emphasized that most cryptocurrency transactions—including indirect sales of tokens on secondary markets—are considered securities transactions. This is due to the fact that certain investors may anticipate these assets will appreciate in value, as legal counsel pointed out.
Based on Binance‘s argument, the Securities and Exchange Commission’s revised accusations against Binance are not valid under the law and should be permanently dismissed, without allowing for any further amendments.
What are blind transactions?
In the revised court filing, the Securities and Exchange Commission made it clear that their accusations are not directed at Binance’s BNB token launch, as it was understood by investors that they were buying BNB from Binance Holdings during the initial coin offering.
Instead, the SEC claims that Binance Holdings conducted secret transactions for BNB on both Binance and Binance.US platforms, selling these tokens to buyers unaware that they were actually buying from BHL.
In the world of cryptocurrencies, transactions labeled as ‘blind’ are those that do not disclose all details about the assets being transferred. This is common in the industry because of the complexity of smart contracts and the constraints of crypto wallets in revealing such specifics. (As per Coinbase)
Back in July 2023, U.S. District Judge Analisa Torres made a ruling that mirrors the SEC’s assertions concerning XRP (XRP) sales led by Ripple executives. However, her decision stated that certain digital token transactions carried out by Ripple did not break the law as initially claimed by the SEC.
The judge explained that those sales involved “bids or offers without disclosing the counterparty,” meaning buyers couldn’t tell whether their funds were going to Ripple or another XRP seller.
In the SEC’s ongoing lawsuit against Binance, which began in June 2023, the recent advancements mark yet another significant step forward in over a year-long legal confrontation.
In late September, the founder of Binance, CZ, completed a four-month sentence in a United States federal prison following his admission of guilt for breaking U.S. Anti-Money Laundering regulations.
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2024-11-05 13:43