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In a recent development that signifies an effort to establish a consistent regulatory framework for digital assets, the U.S. Securities and Exchange Commission (SEC) has heightened its legal offensive against major cryptocurrency exchanges Binance and Coinbase. The SEC, citing a recent court victory against Terraform Labs, is attempting to fortify its stance in the ongoing legal battles.
The SEC has referenced a decision from the Southern District of New York, which ruled that several digital assets, including UST, LUNA, wLUNA, and MIR tokens, should be classified as securities. The SEC included this ruling in a new filing related to its case against Coinbase, arguing that the Terraform Labs judgment supports its stance and is relevant to the issues at hand in the Coinbase case.
In a bid to strengthen its case against Binance, particularly concerning the classification of the cryptocurrency BUSD as a security, the SEC is asking courts to consider the recent Terraform Labs ruling while deciding separate cases brought against Binance and Coinbase. The SEC’s reference to the Terraform ruling counters an earlier motion to dismiss the case filed by BAM Management and BAM Trading in September. The recent judgment in the Terraform case has provided the SEC with a basis to argue that the Howey test, a criterion for determining whether certain transactions qualify as ‘investment contracts’, should also apply in the Binance case.
SEC’s submission is specifically directed against a prior motion by Coinbase, which had sought a judgment in its favor. This legal maneuver is part of increasing SEC scrutiny over cryptocurrency exchanges and their compliance with US securities laws. Both the SEC case against Binance and against the largest US exchange Coinbase are landmark cases that will come to an end this year. Their outcome will shape the crypto landscape, underscoring the importance of victories by crypto players in the US courts.
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