Binance and its former CEO, Changpeng "CZ" Zhao, have filed a notice with the U.S. District Court to incorporate the government's stance on stablecoins as securities into their case with the SEC. The government's argument that USD Coin (USDC) is not a security in the criminal case against Avraham Eisenberg could support Binance's defense against allegations of unregistered security offerings involving BNB and Binance USD (BUSD).
Binance Files Motion in SEC Case, Citing Government's Position on Stablecoin Securities
Washington, D.C. - Cryptocurrency exchange Binance and its former CEO Changpeng "CZ" Zhao have filed a notice with the United States District Court for the District of Columbia, seeking to establish the government's position on the classification of stablecoins as securities.
The filing, submitted on April 25, 2023, cites the Justice Department's recent arguments in its criminal case against Mango Markets exploiter Avraham Eisenberg. In that case, prosecutors asserted that there was no factual basis for treating USD Coin (USDC) as a security.
Binance's lawyers argue that this position supports their arguments in the ongoing civil case brought by the Securities and Exchange Commission (SEC), which alleges that Binance conducted unregistered offerings and sales of its native token BNB and the stablecoin Binance USD (BUSD).
The Justice Department's argument appears to be limited to USDC, while the SEC's case against Binance encompasses both BNB and BUSD. The SEC's complaint, filed in June 2023, also alleges that Binance operated unregistered Simple Earn, BNB Vault, and staking programs.
Despite the ongoing SEC case, Binance and Zhao reached a settlement with the Justice Department, Treasury Department, and Commodity Futures Trading Commission in November 2023, agreeing to pay $4.3 billion in fines. Zhao resigned as CEO of the crypto exchange and pleaded guilty to a single felony count as part of the deal. He is scheduled to be sentenced on April 30.
Binance continues to face scrutiny from regulators and authorities worldwide. Two Binance executives were recently arrested in Nigeria after the exchange announced it would cease all transactions in the local fiat currency, the naira. Additionally, authorities in Canada filed a class-action lawsuit against Binance on April 19, alleging that the exchange sold unregistered crypto derivative products.
The outcome of Binance's court battle with the SEC could have significant implications for the cryptocurrency industry, particularly regarding the regulatory status of stablecoins. The government's position on this issue will be closely watched by investors, regulators, and legal experts alike. As the case proceeds, further updates and developments are expected.
