Binance Vs SEC: DOJ Lawsuit Reveals Key Details on Stablecoins as Securities
In a groundbreaking development in the ongoing legal battle between Binance Holdings and the U.S. Securities and Exchange Commission (SEC), key details have emerged that could potentially shift the tide in favor of the cryptocurrency exchange. In a recent court filing, Binance and its former CEO Changpeng Zhao leveraged the United States v. Eisenberg lawsuit to challenge the SEC’s classification of stablecoins as securities.
The crux of the matter lies in the SEC’s assertion that stablecoins like Binance USD (BUSD) and USD Coin (USDC) should be treated as securities and therefore subject to regulatory oversight. However, a recent exhibit in the U.S. Department of Justice filing in the $110 million Mango Markets fraud case revealed that USDC does not meet the criteria to be classified as a security under the Howey test.
According to the DOJ filing, the key determinant of a security is whether holders of the asset “expect profits” from the efforts of others. In the case of USDC, there is no factual basis to suggest that holders anticipate any form of profit, thereby undermining the SEC’s argument that stablecoins should be regulated as securities.
Furthermore, Circle, the issuer of USDC, argued that stablecoins pegged to the U.S. dollar, such as BUSD and USDC, do not qualify as securities since users do not expect to derive profits from their standalone purchases. This argument further strengthens Binance’s position that stablecoins should not be classified as securities and fall outside the SEC’s jurisdiction.
The recent developments in the lawsuit could potentially pave the way for Binance to secure a favorable outcome and gain clarity on the regulatory status of BUSD. If the court rules in favor of Binance, it could set a precedent for how stablecoins are treated under U.S. securities laws and have far-reaching implications for the cryptocurrency industry as a whole.
As the legal battle between Binance and the SEC continues to unfold, the outcome of this case could have significant ramifications for the future of stablecoins and regulatory oversight in the crypto space. Stay tuned for further updates on this developing story.
