Binance reached a settlement agreement with the U.S. Department of Justice, the Commodity Futures Trading Commission (CFTC), the Office of Foreign Assets Control (OFAC), and the Financial Crimes Enforcement Network (FinCEN) in November last year, pleading guilty and agreeing to pay a $4.3 billion fine. But litigation with the U.S. Securities and Exchange Commission (SEC) is still ongoing.
Debate over regulatory scope
According to Blockworks, Binance and the SEC held a four-hour hearing on the case in the U.S. District Court for the District of Columbia on the 22nd. Binance attempted to dismiss the SEC’s charges. Judge Amy Berman Jackson questioned Binance’s position. She Ask Binance lawyers how they think the SEC does not have the authority to apply securities laws to cryptocurrencies.
Binance’s lawyer responded that he did agree with the SEC that the definition of securities law is broad, but in addition to the broad definition, securities law has other purposes. He emphasized that there must be restrictive factors in securities law, otherwise real estate may become a security.
During the hearing, Amy Berman Jackson seemed increasingly frustrated with the Binance team, at one point asking Binance to stop repeating its argument that investment contracts can only apply to those who have signed an actual contract. Whether each asset meets the requirements of the Howey Test will waste a lot of time. She also suspects that Binance has not even correctly explained the definition of an investment contract in the Howey Test.
Binance hopes to invoke major issues principle
Last week, another exchange, Coinbase, also held a hearing in the U.S. District Court for the Southern District of New York in response to seeking to dismiss the SEC lawsuit. Binance, like Coinbase, called for the invocation of the "significant issues doctrine," which stipulates that an institution must release information with Rules with significant economic or political implications would require clear direction from Congress to do so.
Extended reading: Coinbase is being sued by the SEC. The court has held that the listing of tokens is not securities, but the court has not yet made a ruling.
Binance argued in the motion to dismiss that due to the broad nature of the SEC's arguments, it would have a huge impact on the cryptocurrency market. Amy Berman Jackson admitted that the case had an impact on the entire cryptocurrency industry, but she was not inclined to believe that the major issues principle was applicable to this case. , similar to the judge’s position in the SEC v. Coinbase case, she has not yet decided whether to agree to dismiss the case.
