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"Binance Attempts To Toss Out SEC Allegations". Binance Vs SEC Face Off In The Court

"Binance Attempts To Toss Out SEC Allegations". Binance Vs SEC Face Off In The Court

By Coins Reporter | Coinsreporter | 23 Jan 2024


In an attempt to defend Binance's last major legal obstacle in the United States, in a D.C. Court yesterday, Binance Lawyers strongly augmented for a complete 'toss out' of SEC allegations on Binance and its former CEO Changpeng Zhao. However this turned out to be a fierce battle with arguments from both sides. No verdict as of now but this hearing may be benifit Binance and CZ. Let's see how?

The Background 

Last year in June, The SEC accused Binance and CZ on multiple grounds including artificially inflating trading volumes,  diverting customer funds, failing to restrict U.S. customers on its exchange, misleading customers and allowing them to trade crypto tokens that SEC observes as unregistered securities. 

As for the all other charges than the one about tokens being traded as unregistered securities, Binance agreed to pay $4.3 billion in November to settle with the Department of Justice and the Commodity Futures Trading Commission over illicit finance breaches. Former CEO Changpeng Zhao pleaded guilty to breaking U.S. anti-money-laundering laws and agreed to step down as CEO. 

The Recap Of Monday Hearing 

The hearing on Monday was specific to to the request of Binance that wanted to completely write off SEC allegations about crypto tokens as unregistered securities. 

In the starting, the judge asked lawyers for Binance over the argument why they requested a dismissal of the case. In their defend the Binance lawyers put an argument that the SEC has no authority to regulate the crypto assets at issue because they aren't investment contracts. 

In their favour, the SEC then briefed about the Securities ACT 1933 which clearly defines the term 'security'. 

Again Binance lawyers indicated that the act is only an indication but to exactly define the 'securities', most experts rely on a court case. 

SEC lawyers mentioned that the key test to determine a 'security' is to note whether an asset in contracted in the expectation for profits. 

The judge Amy Jackson, however seemed interested and asked Binance lawyers whether they are asking to form seperate laws for crypto. She also mentioned that the  laws previously enacted are flexible enough to shelter investors. 

She also asked SEC to determine a boundry line to decide whether an asset or token is a security.

Judge asked to decide for a boundry line that distinguishes between a security and a non security asset

Image Credit

The Judge's Reaction 

"It seems like you are trying to say that all digital assets, at the end of the day, have the earmark of securities. If you are not, where is the boundary of what you are saying?" asked the judge in a firm voice. 

So from the attitude of the judge who also heard the Coinbase vs SEC last week, it's easy to grasp that SEC would be in a catch-catch situation as it needs to answer this time for the distinction line which it had never drawn.

Binance Lawyer Fiery Argument

Binance lawyers have definitely seemed more prepared and active to launch counter arguments which adavance to show how pathetic the attitude of  SEC been towards crypto industry. His words after all define the course for crypto in upcoming days.

"The SEC to this day has been talking out of both sides of its mouth when it comes to crypto tokens," said Matthew Gregory, a lawyer for Binance, at the hearing. "They're telling the industry (to) come in and register, while simultaneously with their other hand holding the door closed and preventing any viable path to do that."    

Conclusion

From this hearing, it's quite viable that the crypto industry will get answers regarding how to determine 'tokens for securities'. As for CZ and Binance, Judge's asking for the boundry line from SEC, can be classified as a small victory. For all of us, this may be one of those days when we see crypto marching forward with small steps.

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Coins Reporter
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Once a Bitcoiner and forever will be. Love to share my views even if they are unbelievable.


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