The ongoing legal battle between Binance and the US Securities and Exchange Commission (SEC) has entered an interesting phase. The SEC has recently filed a notice of supplemental authority, referring to the judgment in SEC v. Terraform Labs as a noteworthy precedent.

The SEC's strategic maneuver is intended to use the Terra ruling as leverage in their case against Binance, Binance.US, and their former CEO Changpeng 'CZ' Zhao.

On the other hand, legal expert Bill Morgan, who is known for his pro-crypto stance, contends that the Terraform Labs ruling may not have direct relevance to the SEC's case against Binance and Coinbase.

Significance of Terra Ruling in Lawsuits Involving Binance and Coinbase

In relation to the Terra case, Dave Weisberger, the co-CEO of CoinRoutes, emphasized that the main emphasis revolved around the marketing efforts of UST, LUNA, and the yield generated through Anchor Protocol, which were spearheaded by Do Kwon, the co-founder and former CEO of Terraform Labs.

Weisberger emphasized that the core of the case was centered around the determination of an investment contract, rather than the tokens themselves. This viewpoint is essential for comprehending the SEC's argument and the potential ramifications it carries.

Bill Morgan concurs with Weisberger's evaluation, suggesting that the application of the Howey test in the Terraform Labs case may be just as significant and distinct as the Torres decision concerning Ripple's sale of XRP.

Morgan indicates that the Terra ruling might have limited significance and persuasive power when considering the Coinbase and Binance lawsuits.

Morgan emphasizes that legal cases frequently hinge on their particular facts, especially when crucial legal issues are sensitive to specific circumstances. Morgan highlights that it will be intriguing to observe which case carries more persuasive weight in future similar cases.

The Significance of SEC's Dependence on the Terra Case

Based on the report by Bitcoinist, the SEC's argument revolves around the interpretation of the 'investment contract' definition in cryptocurrency offerings within the Terra case.

According to the SEC, they argue that the classification of UST, LUNA, wLUNA, and MIR as investment contracts and securities through the application of the Howey Test by the court is directly relevant to the products and services provided by Binance.

This includes BUSD (Binance USD), the staking service BNB Vault, and the Simple Earn program. The SEC emphasizes that the Terra ruling should influence the court’s decision on Binance’s dismissal motion, highlighting the relevance to defendants BAM Trading Inc. and BAM Management US Holdings Inc.

Bill Morgan's analysis contradicts the SEC's position by challenging the idea that the Terra ruling is directly applicable to the SEC's case against Binance and Coinbase.

Morgan argues against the SEC's attempt to expand the scope of the ruling to encompass digital assets and services offered by the exchanges. He believes that the tokens and services are not subject to securities law.

Morgan's perspective raises concerns about the SEC's approach and emphasizes the importance of thoroughly analyzing the unique facts and legal aspects of each individual case.

As the legal proceedings between the SEC and two prominent crypto exchanges unfold, it will be crucial for the court to meticulously evaluate the facts and legal arguments put forth by both parties. The court will then determine the relevance and persuasive power of the Terra ruling.