Binance Seeks Clarity on Stablecoins with SEC Amid Ongoing Legal Scrutiny
Summary:
Binance and its former CEO, Changpeng "CZ" Zhao, have submitted a legal notice to establish the U.S. Securities and Exchange Commission's position on stablecoins. The notice points to a government argument stating stablecoins are not a security, in support of Binance's ongoing civil case. While Binance settled with several U.S. departments for $4.3 billion in November 2023, the case with the SEC remains ongoing. The crypto exchange is under continued global scrutiny, with recent legal actions in Nigeria and Canada.
In an effort to ascertain the stance of the United States Securities and Exchange Commission (SEC) on stablecoins, Binance and its former CEO, Changpeng “CZ” Zhao, have submitted a legal notice. The document was filed in the U.S. District Court for the District of Columbia on April 25 and highlights the U.S. government's position in the criminal suit against Mango Markets manipulator Avraham Eisenberg. In this case, government officials argued that there was no valid grounds to consider USD Coin (USDC) as a security, rendering it outside the purview of the SEC.
This argument was deployed by the Justice Department in its proceedings against Eisenberg, who was convicted of fraud and market manipulation on April 18. This assertion that a stablecoin is not subject to SEC regulation could strengthen Binance's defence in the pending civil lawsuit.
The arguments, however, were focussed exclusively on USDC, while the SEC's action against Binance additionally encompassed BNB BNB and Binance USD (BUSD). The lawsuit, filed in June 2023, asserts that Binance and CZ facilitated illicit offers and sales of BNB and BUSD, in addition to Binance's Simple Earn, BNB Vault, and staking programmes.
As of press time, proceedings against Binance by the SEC continue, although in November 2023, the company and CZ reached a $4.3 billion settlement with the U.S. Justice Department, Treasury Department, and Commodity Futures Trading Commission. As part of this settlement, Zhao stepped down from his role as CEO and conceded to a single felony charge. His sentencing is set for April 30.
Global regulators and authorities continue to scrutinise the crypto exchange. Following Binance's announcement of discontinuing all transactions in Nigerian currency, the Naira, two of its executives were arrested in Nigeria. Additionally, a class-action lawsuit was filed against Binance in Canada on April 19, alleging the trading platform of selling unauthorized crypto derivative products.
Published At
4/26/2024 9:33:07 PM
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