The SEC and Binance are facing tough questions from the judge in a landmark crypto case

Upland: Berlin is here!

Court transcripts from SEC v. Binance Holdings, Inc, and others. the. It began to emerge, revealing that central arguments in the cryptocurrency space are now being actively debated in US courts.

US District Judge Amy Berman Jackson is presiding over the case between Binance, the world’s largest cryptocurrency exchange, and the US Securities and Exchange Commission (SEC), which is Exchange sue To commit widespread offenses in the field of securities fraud.

The Securities and Exchange Commission accused Binance and its founder, Changpeng Zhao, of “weaving a vast web of deception” by allegedly manipulating the market and deceiving regulators, shareholders and customers.

Yesterday’s hearing revolved around the SEC’s pursuit of a temporary asset freeze and repatriation of billions of dollars, asserting that investors’ money is at risk.

The SEC answers court questions

Justice Jackson is known for her meticulous handling of high-profile public corruption cases in recent years, including the prosecution of longtime Donald Trump advisers Paul Manafort and Roger Stone.

Her questioning of both sides of the Binance case indicates skepticism toward each side’s arguments. She asked about the SEC’s approach of using an enforcement procedure rather than a rulemaking process to create a national policy for regulating crypto assets.

In response, the SEC insisted on the correctness of its approach, citing long-standing rules and the need to act when laws are broken. “Because that’s the law, Your Honor,” replied Matthew Scarlato, an SEC attorney, referring to the existing Howey test used to determine what constitutes a security.

In particular, Judge Jackson argued against the SEC’s distinction between “crypto-asset” and “crypto-asset securities,” which the SEC maintains meet the conditions described in the Howey test. However, when pressed to answer whether that would make simple “crypto asset” goods, the plaintiff demurred, saying, “We are not taking a position at this time.”

Binance is under fire

Judge Jackson also disagreed with Binance’s defense, which alluded to a lack of regulatory clarity in the cryptocurrency industry. She questioned the relevance of this argument in a court of law, asserting that such matters might be more convenient for Congress than for the judiciary.

Furthermore, it expressed its concerns about alleged offshore transfers and the complex ownership structure of the entities that own BAM Trading, the US subsidiary of Binance:

The government said at this point that it had not seen evidence of offshore transfers from BAM Trading itself. But we do have significant evidence of offshore transfers and we have the issue of individual defendant ownership of the entities that own BAM Management, which is the parent company of BAM Trading. So there are a lot of layers. That going on here and there are plenty of onions to peel to see who is doing what.”

Significantly, Judge Jackson swiftly rejected the argument that Binance could have been caught off guard, citing not only Wells’ notice received on the exchange but CEO Changpeng Zhao’s public comments themselves.

Some of your allegations claim that they were shocked that the SEC thought you were dealing in securities and took this step. Some of the surprise expressed in the pleadings rings a little hollow in light of Defendant Zhao’s statements over the years, and the fact that the SEC has Binance was banned from doing business in the US in 2019.”

The judge concluded her point by telling the defense, “You could argue with the strength of the evidence… I probably don’t need to exaggerate too much about how shocking this is, and I probably don’t need to hear the word ‘draconian’ any more.”

As the cryptocurrency industry continues to mature, the outcome of this watershed will be closely watched by industry players, regulators, and investors around the world.

Source link

Leave a Comment

Your email address will not be published. Required fields are marked *