court records from SEC vs. Binance Holdings Inc.,Such.Al. This opinion has begun to emerge, and it has become clear that the central debate in the cryptocurrency field is currently being actively debated in US courts.
U.S. District Judge Amy Berman Jackson has launched a lawsuit between Binance, the world’s largest cryptocurrency exchange, and the U.S. Securities and Exchange Commission (SEC), which is suing the exchange for widespread securities fraud violations. is in charge of
The SEC has accused Binance and its founder, Zhao Changpeng, of “weaving a web of pervasive deception” through alleged market manipulation and deception against regulators, shareholders and customers.
Yesterday’s hearing revolved around the SEC calling for a temporary asset freeze and the repatriation of billions of dollars, alleging investor funds were at risk.
SEC Answers Court Questions
Judge Jackson is known for meticulous handling of recent high-profile public corruption cases, including the prosecutions of longtime advisers to President Donald Trump, Paul Manafort and Roger Stone. ing.
Her questioning of both sides in the Binance case suggested skepticism of each party’s claims. She questioned the SEC’s approach of using enforcement action rather than a rulemaking process to set national policy for regulating crypto assets.
In response, the SEC justified its approach by citing longstanding rules and the need to act when the law is violated. “Because it’s the law, Sir,” SEC Counsel Matthew Scarlato replied, referring to the existing Howie test used to determine what constitutes a security.
In particular, Judge Jackson objected to the SEC’s distinction between “crypto assets” and “crypto assets securities,” arguing that the latter satisfies the conditions outlined in the Howie test. But when asked if it would be a simple “cryptocurrency” product, plaintiffs responded, “We have not taken a position at this time.”
binance under attack
Judge Jackson also took issue with Binance’s defense alluding to a lack of regulatory clarity in the cryptocurrency industry. She questioned the relevance of this debate in court, stressing that such issues may be better suited to Congress than to the judiciary.
She also expressed concern about alleged offshore transfers and the complex ownership structure of the entity that owns Binance’s US affiliate, BAM Trading.
“The government has said at this time that it has not seen any evidence of offshore transfers from BAM Trading itself. There’s also the issue of individual defendant ownership of the entity, which means there’s a lot of layers going on here, and you have to peel a ton of onions to figure out who’s doing what. it won’t.”
Importantly, Judge Jackson swiftly dismissed the allegation that Binance may have been caught off guard, pointing not only to the Wells notice the exchange received, but to CEO Changpeng Chao’s public comment itself. Thing.
“Some of your allegations claim that the SEC was shocked that it thought you were dealing with securities and took such action. The Department sounded a bit hollow given Zhao’s statements over the years and the fact that the SEC banned Binance from doing business in the US in 2019.”
The judge closed the argument by telling the defense: ‘ already. “
As the crypto industry continues to mature, the consequences of this momentous incident will be watched closely by industry insiders, regulators and investors around the world.
