The federal court will rule on the case of Binance vs SEC
Cryptocurrencies and secondary sales of the BNB token do not constitute securities, a federal court ruled in another significant victory for the crypto industry.
US Federal Court Judge Amy Berman Jackson has ruled that Binance Coin (BNB) cryptocurrencies and secondary sales are not securities offerings.
In a significant victory for Binance.US, the judge dismissed several claims filed by the United States Securities and Exchange Commission (SEC), according to Binance's announcement on July 2.
“The court ruled that the SEC could not plead that buyers in the secondary market sale of BNB received profits over other services, which is a key requirement to pass the Hawaii test (a legal framework defined by the Supreme Court to determine whether a transaction qualifies as an investment contract).
The SEC began cracking down on crypto exchanges after the FTX collapse to avoid a similar meltdown. However, the regulatory approach has been widely criticized as potentially stifling innovation.
The ruling may have positive implications for other ongoing legal battles, such as the Ripple vs SEC lawsuit.
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Cryptos are not securities
In a major victory for the crypto industry, Judge Jackson said that crypto tokens themselves are not securities.
According to the decision, this means that cryptocurrencies are not investment contracts that fall under the supervision of the SEC, according to the announcement.
“The court's approach to the SEC misconstrued the issues and ignored precedential control of the United States Supreme Court. The court stressed that the circumstances surrounding each transaction should be taken into account to ensure that it does not constitute a securities transaction.
The judge also ruled that the focus should be on the circumstances of each token sale and not on the cryptos themselves, which are not considered securities.
The ruling comes as a sign of relief for investors, as the SEC previously listed 68 cryptocurrencies as securities, after listing Binance's BNB coin, in June 2023, along with nine other cryptos, while suing Binance and Coinbase.
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Binance vs. SEC
In June 2023, the SEC charged exchanges Binance and Coinbase with security breaches. In its lawsuit against Binance, the SEC alleged that the company and its founder, Changpeng Zhao, misappropriated billions of users' funds.
Despite no evidence of misuse of user funds, Binance was accused of violating anti-money laundering laws and ordered to pay one of the most significant criminal fines in history, estimated at $4.3 billion.
The next court hearing in the Binance.US vs SEC case is scheduled for July 9.
The US wing of the world's largest exchange has revealed that it is ready for a longer period of legal discovery. In a post on June 2 X said:
“On Friday, the court ruled that the SEC case against Binance.US will continue. We are prepared for this and look forward to this case continuing through the trial process.
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