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A judge rejected the SEC's claim that the BNB sales constituted securities distribution

A judge rejected the SEC's claim that the BNB sales constituted securities distribution

Cryptodnes2024/06/29 22:19
By:Cryptodnes

Judge Amy Berman Jackson rejected the Securities and Exchange Commission's (SEC) claim that secondary sales of Binance's BNB coins could qualify as securities under the Howie test.

Citing a similar decision by Judge Analisa Torres in the Ripple case, Judge Jackson emphasized the need to consider the economic reality of the token transaction when applying the test.

Judge Jackson noted more , that the government's argument that "cryptoassets are the embodiment of the investment contract', along with the points about the nature of the technology, platform independence and token presentation, is insufficient to classify the secondary sales of BNB Faucet such as investment contracts.

The judge also rejected the SEC's claims regarding the sale of the Binance USD (BUSD) stablecoin and the passive income feature "SimpleEarn". She pointed out that the SEC's underlying theory, which does not directly assert that coins are securities but instead frames them as investment contracts, is inconsistent.

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It was also emphasized that the nature of a token may evolve over time, suggesting that even if a token initially qualifies as a security, it does not necessarily remain so indefinitely. This distinction significantly weakens the SEC's position and is a key decision in the debate over the classification of digital assets.

Despite this significant win for Binance, Judge Jackson allowed the SEC to continue to prosecute cases related to Binance's BNB staking program, anti-fraud violations, and post-ICO sales of BNB. The SEC may also maintain its claims that Binance founder Changpeng Zhao acted as a “controlling person” of the company, suggesting that Binance should have registered under the Exchange Act.

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