Judge Dismisses SEC\'s Claim That Binance\'s BNB Secondary Sales Qualify as Securities

In a recent ruling, the U.S. District Court for the District of Columbia has dismissed several claims in the ongoing lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against Binance and its affiliates.

A U.S. District Court has dismissed several claims in the ongoing Securities and Exchange Commission (SEC) lawsuit against Binance and its affiliates, according to a recent court filing.

The court’s ruling pertains to the status of BNB secondary sales, which the SEC had alleged to be unregistered securities offerings. However, the court found that the SEC had not adequately proven this claim.

The court also noted that these secondary sales, being conducted by entities separate from Binance, did not exhibit the characteristics of securities transactions.

This aspect of the ruling is particularly relevant as the case hinges on the ICO and Binance’s ongoing direct sales of BNB. The court’s decision essentially implies that the SEC must present stronger evidence to make claims concerning the secondary market in the cryptocurrency industry.

In a separate development, the court also addressed the SEC’s allegations regarding Binance USD (BUSD), a stablecoin issued by Binance.

The SEC had alleged that Binance violated Sections 5(a) and 5(c) of the Securities Act by offering and selling BUSD without a proper registration statement.

The court noted that while BUSD may meet the definition of a "security" under the Howey Test, the SEC had failed to show that Binance was the seller of the stablecoin in secondary market transactions.

This aspect of the ruling could have implications for future cases involving stablecoins and the role of exchanges in their primary and secondary market sales.

While several claims have been dismissed, the SEC’s case against Binance is still ongoing, with several key allegations remaining intact.

The court’s decision in this high-profile case is being closely watched by the cryptocurrency industry and could set legal precedents regarding cryptocurrency exchanges and their obligations under securities laws.

The court’s decision to dismiss certain claims while allowing others to proceed highlights the nuanced nature of cryptocurrency regulation and the challenges faced by regulatory bodies in applying classical securities laws to the new digital asset market.

Meanwhile, BNB Coin is currently trading at $581.96, showing an appreciation of 1% over the last 24 hours, according to data from CNF Marketcap.

It is worth noting that the SEC had initially filed a lawsuit against Binance and its affiliates in June 2023, alleging that the exchange and its CEO, Changpeng Zhao, had offered unregistered securities in the U.S.

In response, Binance had filed a motion to dismiss the lawsuit, arguing that the SEC had overstepped its jurisdiction and that its tokens were not securities.

The next court hearing in this case is scheduled for July 9, 2024.

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