The battle between the U.S. Securities and Exchange Commission (SEC) and Binance escalates as the SEC opposes Binance’s motion to dismiss the ongoing lawsuit. Binance and its CEO, Changpeng “CZ” Zhao, have been contesting the SEC’s allegations in court.
Read CRYPTONEWSLAND onThe dispute revolves around whether Binance’s stablecoin, BUSD, constitutes an investment contract. Binance argues that BUSD doesn’t offer a chance of profit, making it exempt from the Howey Test. In contrast, the SEC asserts that Binance marketed and sold BUSD as an investment contract.
This legal clash gained momentum in September when the SEC faced difficulties obtaining permission to investigate the software used by Binance.US, an American affiliate of Binance. Since filing the lawsuit against Binance, Binance Holdings, and Changpeng Zhao in June, the SEC has encountered obstacles in acquiring information from Binance.US.
The SEC cited the Ripple finding to strengthen its position, emphasizing that Binance relied on it to obscure the details of certain transactions involving XRP. According to the SEC, these transactions were non-securities, but the lack of transparency left buyers unaware of the destination of their funds.
The legal battle between the SEC and Binance underscores the regulatory complexities surrounding digital assets and their classification. As the lawsuit proceeds, it raises questions about the definition of investment contracts and the application of the Howey Test within the crypto space.
Both parties remain entrenched in their positions, and the outcome of this legal confrontation could have significant implications for the broader crypto industry. This legal tussle highlights the growing scrutiny and regulatory challenges faced by crypto exchanges and companies operating in the United States.
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