The SEC has submitted a new argument in its ongoing legal battle with Binance, referencing a recent decision involving Terraform Labs.
The move by the SEC aims to strengthen its case against Binance, particularly concerning classifying the cryptocurrency BUSD as a security. In the latest filing, the SEC highlighted the court’s decision in the Terraform case, where cryptocurrencies such as UST, LUNA, wLUNA, and MIR were deemed securities based on the Howey test.
The Howey Test is a legal standard established by the U.S. Supreme Court to determine whether a transaction qualifies as an “investment contract” and, thus, a security. It assesses if money is invested in a common enterprise with a reasonable expectation of profits.
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. In this motion, BAM Management had argued that investments in cryptocurrencies like LUNA did not constitute an investment contract under the SEC’s interpretation.
The SEC maintained that promoters used money invested in such tokens for developing blockchain functionalities or offering yield-bearing returns, with the investors standing to gain value based on the promoters’ actions.
However, the recent judgment in the Terraform case has provided the SEC with a basis to argue that the Howey test, a legal standard used to determine what constitutes a security, should also apply in the Binance case. The SEC emphasizes that the court’s analysis of Terraform’s UST stablecoin is highly relevant when considering Binance’s BUSD and other offerings like BNB Vault and Simple Earn programs.
Source: https://crypto.news/sec-cites-terraform-ruling-in-binance-case-claims-busd-as-a-security/