Binance Rejects Security Label for Assets, Challenges SEC’s Howey Test Failure

In the ongoing clash between Binance and the U.S. Securities and Exchange Commission (SEC), the cryptocurrency giant is vehemently denying accusations of offering unregistered securities to American investors. Despite settling for $56 million with the Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN), Binance insists it has no connection to the SEC’s current charges.

Diving into the latest courtroom standoff, Binance challenges the SEC’s claims, arguing that the regulator’s recent brief lacks groundbreaking evidence.

Let’s dig into the details to understand Binance’s side of the story.

Binance’s Defense Moves

Responding to the SEC’s allegations, Binance steps up its defense, focusing on the SEC’s claim that it allowed trading of unregistered securities. The core issue revolves around the “Howey Test,” a critical benchmark in securities law. Binance disputes the SEC’s argument, pointing out the absence of established investment contracts for U.S. customers involved in cryptocurrency transactions, a crucial factor under the Howey Test.

This counter-move is part of Binance’s strategy to dismiss the SEC’s lawsuit filed in June, accusing Binance and its U.S. entity of facilitating the public trade of unregistered securities through specific cryptocurrency listings and a staking service.

Downplaying Settlements: Binance’s Play

To downplay the impact of recent settlements with the DOJ and FinCEN, Binance contends that these resolutions, addressing different charges related to laws like the Bank Secrecy Act (BSA), don’t indicate violations of securities laws.

The filings argue that the DOJ settlements, admitting to BSA violations, should not be seen as an admission of breaching securities laws under the SEC’s jurisdiction. Binance and its founder, Changpeng Zhao, emphasize that the plea agreements with the DOJ didn’t properly notify or indicate that the assets in question were considered securities under the Securities Act or the Exchange Act overseen by the SEC.

Calling Out the SEC: A Bold Move?

Binance boldly challenges the SEC’s attempt to introduce new arguments and facts, calling it improper. The cryptocurrency giant accuses the SEC of relying on other agencies’ resolutions, suggesting a lack of solid regulatory backing. The looming question is: how will the SEC back its allegations against Binance amid proposed changes to U.S. securities laws?

This drama is far from over, promising more twists and turns in the tumultuous relationship between Binance and the SEC.