The highly anticipated hearing of the SEC’s lawsuit against Binance occurred today in Washington, as bitcoin the trial revealed several challenges for the leading exchange.
Last year, the SEC accused Binance and its U.S. arm of multiple violations, including inflating trading volumes, misusing customer funds, and misleading investors about market controls, further complicating the crypto regulatory landscape.
In presiding over the case, Judge Berman Jackson took a direct approach, bypassing prepared arguments and asking incisive questions. Her skepticism about the necessity of a contract in an investment contract, drawing on the “scheme” language from the landmark Howey case, set a critical tone for the proceedings. 

SEC v. @Binance hearing, Update IJudge Berman Jackson has dispensed with the prepared arguments and gone straight to questions.She started with the defense team.-She seemed skeptical that an investment contract actually requires a contract.-She focused on the “scheme”…— MetaLawMan (@MetaLawMan) January 22, 2024

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Judge Jackson expressed doubts over the major questions doctrine and the fair notice arguments presented by the SEC, highlighting the ongoing debate around the extent of the SEC’s authority versus that of the Commodity Futures Trading Commission (CFTC).
The Binance case, distinct from the Coinbase scenario, raised unique issues. Judge Jackson’s skepticism regarding the BUSD stablecoin being offered as an investment contract was evident. However, she seemed more open to the argument that Binance’s BNB token might have initially been offered as an investment contract. This led to a broader discussion about the status of tokens on secondary markets, challenging the SEC’s position that a token perpetually embodies an investment contract.

SEC v. Binance Hearing (My) Conclusions:– Secondary Sales: Binance !– Fair Notice and Major Questions Doctrine: SEC !– @cz_binance : CZ !– Howey Test: SEC !And, if you hold the BNB token , well, you might want to take a good hard look at the “Sell” button!— Jeremy Hogan (@attorneyjeremy1) January 22, 2024

The court session ended without a clear resolution on the SEC’s jurisdiction over tokens like Filecoin, leaving out mentioning other major tokens such as Cardano or Solana. The judge resisted conducting mini-trials for each token mentioned in the complaint, especially when their issuers were not part of the case.
As the legal battle unfolds, its outcomes are set to shape the future of cryptocurrency regulation, with the world watching closely.

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