Circle Backs Binance in SEC Case, Argues Stablecoins Aren't Securities
Summary:
In the midst of the ongoing legal battle with the Securities and Exchange Commission (SEC), cryptocurrency exchange Binance received support from Circle, which argued that stablecoins like Binance's BUSD and its own USDC should not be classified as securities. Binance and its CEO have asked the court to dismiss the SEC lawsuit, claiming the commission lacked clear guidelines ahead of the suit. Meanwhile, the SEC extended its reach to non-fungible tokens (NFTs), charging two firms for offering them as unregistered securities.
In recent court documentation, Circle, the issuer of the USD Coin (USDC) stablecoin, made a case stating that stablecoins like Binance USD (BUSD) and its own USDC, which are tethered to the U.S. dollar, are not to be considered securities. The company argued this on the basis that buyers of these assets don't anticipate making a profit from owning them, hence they wouldn't meet the criteria of an "investment contract." This sentiment was voiced amidst the ongoing lawsuit by the U.S. Securities and Exchange Commission (SEC) against cryptocurrency exchange Binance, where Circle has declared that stablecoins shouldn't be classified as securities.
On June 5, Binance was prosecuted by the SEC on account of several purported regulatory infractions, totaling 13 charges. Among these were the sales of BNB tokens and BUSD tokens, which the SEC deemed as an unregulated security offering. Furthermore, the SEC claimed Binance's operations within the U.S. to be unlawful due to its failure to register as a broker-dealer clearing agency.
Fast forward to Sept. 22, Binance, along with its CEO Changpeng Zhao, submitted a request for the SEC lawsuit to be invalidated. They argued that the SEC had overreached its jurisdiction with the lawsuit. Their lawyers underscored their conviction that the SEC had essentially implemented its authority retroactively without providing lucid regulations for the sector beforehand.
Relatedly, the SEC's actions do not stop at cryptocurrencies and exchanges but extend to non-fungible tokens (NFTs) as well, categorizing them as securities. On Aug. 28, the SEC took action against entertainment company Impact Theory for selling its NFT series without proper security registration. In a similar instance, another company was charged on Sept. 13 by the SEC over their Stoner Cats NFT series. The SEC claimed that the company facilitated the transactions involving improperly registered securities by offering the NFTs to the public.
Published At
9/29/2023 9:52:15 AM
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