The U.S. Securities and Exchange Commission (SEC) has failed to classify Binance’s native token BNB and its stablecoin Binance USD (BUSD) as securities in the secondary market. Judge Amy Berman Jackson signed the court document on June 28.
Judge Analisa Torres’ 2023 ruling in SEC v. Ripple Labs played a key role in dismissing claims for secondary BNB sales. The court stressed the need to consider the specific circumstances and economic realities of each transaction.
The SEC argued that BNB tokens that were initially sold as investment contracts remain securities in any subsequent sales. However, the court disagreed, saying the details and context of each secondary transaction are crucial.
The court also highlighted inconsistencies in the SEC’s position and requested more facts to support the expectation of profits from secondary sales under the Howey test.
Van Buren Capital’s Scott Johnsson called the ruling a “significant loss” for the SEC.
James “MetaLawMan” Murphy, a cryptocurrency-focused attorney, called the ruling a “win for the cryptocurrency industry.”
The ruling could impact similar cases involving exchanges like Kraken and Coinbase, which are also facing SEC charges for trading unregistered securities.
Despite dismissing the secondary market sales claims, the court allowed the SEC to continue investigating Binance’s staking program, its post-ICO BNB token sale, and potential anti-fraud violations. The charges against Binance’s former CEO Changpeng Zhao and the need for Binance to register as an exchange remain under review.
CZ is currently serving a separate prison sentence for violating money laundering laws. The sentence came after CZ resigned as Binance CEO as part of a November agreement with the U.S. Department of Justice (DOJ). In addition, Zhao was ordered to pay a $50 million fine, while Binance was fined $4.3 billion.
The SEC’s case against Binance and its founder Changpeng Zhao began last June, accusing it of operating illegally in the United States. Binance filed a motion to dismiss the lawsuit, claiming that the SEC exceeded its statutory authority.
About three months later, Binance filed a motion to dismiss the SEC lawsuit, arguing that the SEC exceeded its statutory authority.
According to the latest court order, the next court hearing is scheduled for July 9.
Binance has not yet decided on its new global headquarters due to complexities like tax laws and talent acquisition challenges. Legal troubles, including Changpeng Zhao's legal issues and a $4.3 billion fine, have led Binance to restructure its leadership and adopt better governance strategies.
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