- SEC’s 13 charges against Binance
- Judge questions crypto’s fit in securities laws
- Major questions doctrine invoked by Binance and Coinbase
In a marathon four-hour session at the Washington District Court, cryptocurrency giant Binance found itself in a heated legal clash with the U.S. Securities and Exchange Commission (SEC) over the regulatory status of digital assets. Presiding over the courtroom drama, Judge Amy Berman Jackson expressed visible frustration with Binance’s legal team, particularly their persistent argument that investment contracts necessitate a tangible agreement.
The Crux of the Matter
The focal point of the hearing revolved around the SEC’s 13 charges filed against Binance in June 2023. The regulatory body accused the exchange of selling unregistered securities through tokens like BNB and BUSD, raising concerns about the mingling of client assets.
Judge Jackson wasted no time in challenging Binance’s position on the applicability of securities laws to cryptocurrencies. She questioned the defense’s contention that laws designed for traditional financial instruments could be flexibly applied to this burgeoning industry without a clear congressional mandate. Binance’s attorney, Jason Mendro, argued for limiting factors within the statutes to prevent overreach, drawing a parallel with the potential classification of real estate as a security.
Skepticism and Legal Jousting
The hearing witnessed Judge Jackson expressing skepticism about Binance’s interpretation of the Howey test, a pivotal factor in determining the existence of an investment contract. She cautioned against delving too deeply into Howey’s factors for each alleged asset.
In a surprising twist, both Binance and Coinbase, the latter having faced the SEC in a similar hearing the previous week, attempted to invoke the major questions doctrine. This legal principle suggests that courts should refrain from interpreting congressional law as granting agencies the authority to rule on matters of “major” political or economic significance.
Binance, in its motion to dismiss, underscored the broader implications of the SEC’s arguments, claiming that more than just the crypto market was at stake. While Judge Jackson acknowledged the case’s significance for the entire crypto industry, she exhibited reluctance to apply the major questions doctrine.
Backdrop of Legal Maneuvers
The courtroom drama unfolded against the backdrop of a plea agreement between Binance and its founder, Changpeng Zhao, entailing a substantial $4.3 billion combined financial penalty with various government entities. The crypto community now anxiously awaits Judge Failla’s decision on whether to dismiss the SEC’s case against Coinbase in the coming weeks or months.
Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.