SEC Implements Coinbase Ruling in Binance and CZ Lawsuits: Analyzing Legal Tactics
Cryptocurrency exchanges such as Binance, Coinbase, Kraken, and Kucoin are facing legal troubles that are causing significant concerns. Binance is confronted with a massive $4.3 billion fine for money laundering, while Coinbase is being sued by the SEC for operating an unregistered exchange. Kraken has already settled for $30 million with the SEC, and now Kucoin is also dealing with criminal charges. These issues highlight the lack of clarity surrounding cryptocurrency regulations in the United States. It serves as a reminder that regardless of the size of an exchange, it is safest to keep your cryptocurrency in your own possession.
Judge Failla’s ruling in the Coinbase case is a double-edged sword. The SEC is leveraging this verdict to strengthen its case against Binance, Binance US, and Changpeng “CZ” Zhao. In a bold move, the SEC has included the Coinbase ruling as additional evidence in the Binance lawsuit, utilizing important decisions made in the Coinbase case to support their arguments against Binance and its affiliates.
Judge Failla’s ruling in the Coinbase case has established a significant legal precedent for the SEC, particularly regarding securities issues related to wallet services, staking services, and secondary market sales of crypto assets. This ruling will assist the SEC in their case against Binance for operating an unregistered cryptocurrency exchange and offering crypto-lending products such as “Simple Earn” and “BNB Vault.” Furthermore, the court’s decision in the Coinbase case regarding the registration status of staking programs has implications for Binance’s staking-as-a-service offerings.
The outcome of these cases will have a broader impact on crypto assets that have already been identified by the SEC as securities, such as ATOM, BNB, BUSD, COTI, CHZ, NEAR, FLOW, ICP, VGX, DASH, NEXO, SOL, ADA, MATIC, FIL, SAND, MANA, ALGO, and AXS, among others. The addition of potential securities further complicates the ongoing legal proceedings. These cases are expected to provide clarity on the regulatory status of various crypto assets and determine whether they meet the criteria for classification as securities under the Howey test.
The legal battles have raised a contentious issue regarding whether sales of cryptocurrencies on the secondary market should be considered securities. The SEC argues that these sales are investment contracts, but not all lawyers agree with this perspective. The fact that Judge Failla rejected a similar argument in the Ripple case demonstrates the complexity of the legal debate surrounding secondary market sales.
As the Binance vs. SEC lawsuit approaches its conclusion, both parties are preparing for more court cases. In the coming months, there will likely be meetings and joint status reports. The outcome of these cases will have significant implications for the crypto industry, influencing future regulatory frameworks and providing clarity on the legal status of digital assets.