SEC Aims to Utilize Terraform Court Victory in Cases Against Coinbase and Binance
The SEC seeks to leverage a recent victory in its ongoing case against Terraform Labs in separate lawsuits involving the two major cryptocurrency exchanges, Binance and Coinbase.
Because Bitcoin
January 5, 2024
A recent The Block report revealed that the SEC seeks to leverage a recent victory in its ongoing case against Terraform Labs in separate lawsuits involving the two major cryptocurrency exchanges, Binance and Coinbase.
In a filing related to the case against Coinbase, the SEC references the Terraform Labs court ruling in the Southern District of New York. This ruling granted a summary judgment on the claim that UST, LUNA, wLUNA, and MIR tokens are securities. The SEC aims to use this ruling to strengthen its opposition to Coinbase's motion for judgment in its favor.
The SEC's filing argues that crypto asset issuers, including those on Coinbase's platform, encouraged investors to expect an increase in the value of their investment based on plans to develop and maintain the asset's value. Notably, UST, LUNA, wLUNA, and MIR tokens are not directly mentioned in the SEC's complaint against Coinbase.
In a parallel lawsuit against Binance, the SEC also intends to leverage the Terraform Labs judgment to support its case. The SEC's filing argues that the court's analysis of UST in the Terraform case is relevant to Binance's BUSD stablecoin and its programs like BNB Vault and Simple Earn.
The SEC contends that Terraform Labs previously used arguments similar to those presented by Binance, attempting to separate token selling from developing and promoting the Anchor protocol. The agency argues that Binance's situation with BUSD and related programs provides further grounds to deny motions to dismiss.
While Binance settled criminal charges with the Department of Justice in November, including paying a $4.3 billion penalty, the SEC's lawsuit against Binance for allegedly operating an unregistered securities exchange is ongoing. The SEC filed the lawsuit in June, accusing Binance of repeatedly lying to customers and misdirecting funds. Binance has filed multiple motions to dismiss the case over the past seven months.
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