Federal Judge Amy Berman Jackson overseeing the US Securities and Exchange Commission (SEC) case against Binance, Binance. US and former CEO Changpeng Zhao, ordered a judicial review of whether digital assets are securities.
In a Jan. 18 brief in the U.S. District Court for the District of Columbia, Judge Jackson said she would hear arguments on how the SEC views cryptocurrencies under current regulatory and legal frameworks. Lawyers representing Binance. US, will be allowed to consider whether a digital asset “remains a security in perpetuity,” as well as the SEC's assertion that a bet can be considered a security.
“The court intends to hear arguments about [должен ли инвестиционный контракт включать в себя договорное обязательство и] on “whether the SEC misunderstood the meaning of the term 'scheme' in Howey” from just one attorney, Judge Jackson said. “Similarly, while both memorandums address the substantive issues doctrine and both raise fundamental questions about whether litigation is the appropriate way for the SEC to begin oversight of the cryptocurrency industry at all, one attorney must be appointed to argue the issue for the defense. »
The Howey test was the SEC standard for determining what is a security and is to determine whether an asset meets the definition of an investment contract. Judge Jackson raised this issue, suggesting it would need to be resolved in the Binance case involving tokens including BNB (BNB) and Binance USD (BUSD). It is unclear when both sides will present arguments on the issue.
On the subject: SEC asks the court to review Terraform Labs' decision in the Binance case
In many of its lawsuits against U.S. cryptocurrency companies, the SEC has argued that tokens largely qualify as securities and are subject to regulatory oversight by the commission rather than the Commodity Futures Trading Commission. In July 2023, the judge in the SEC v. Ripple case ruled that the XRP token is not a security with respect to programmatic sales on digital asset exchanges.
Following the Ripple decision, Coinbase's lawyers, also facing a lawsuit brought by the SEC, cited precedent from that case in a motion to dismiss in August 2023. In other cases, the Securities and Exchange Commission (SEC) has fought back, arguing in its lawsuit against Terraform Labs and Do Kwon that the question of whether certain tokens are securities is a “legal issue” for the court, “not a matter of fact.” for the jury.”