SEC intends to amend complaint against third-party tokens in Binance case
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The U.S. Securities and Exchange Commission has notified the court that it intends to amend its complaint regarding several listed third-party tokens in its case against the world's largest cryptocurrency exchange, Binance.
Why it matters: The idea that most cryptocurrencies represent "unregistered securities" under U.S. law has been central to the agency's campaign against the cryptocurrency industry.
- About 37 pages of the original 136-page complaint against Binance and Binance.US had been devoted to arguing why various specific tokens were in fact securities under U.S. law.
The filing comes after a conference between the parties in which the court had tasked them with coming up with a proposed schedule for procedure. The SEC's filing removes the need for the court to issue a ruling "as to the sufficiency of the allegations" tied to those 10 specific tokens "at this time."
Between the lines: The SEC did not indicate what aspect of the complaint it might seek to amend.
- The filing also raises the possibility that the agency will make broader amendments to its complaint. In a discussion concerning discovery, defendants note:
- "The detail in the SEC's proposal above regarding amendment was not disclosed to Defendants until 11:53 PM ET on July 29, 2024, and suggests that they intend amendments beyond the claims concerning the Third-Party Tokens."
- The SEC declined to comment.
Catch up quick: Earlier this summer, the court in the Binance case rejected the idea that a cryptocurrency token can be, in and of itself, an "investment contract" under the Supreme Court's Howey Test.
- Specifically, the judge threw out the case against binance usd (BUSD), a stablecoin it once offered.
Zoom out: By trading volume, Binance remains easily the largest cryptocurrency exchange in the world, despite this case and the criminal sentence against its founder, Changpeng Zhao (CZ).
What's next: The SEC will submit an amended complaint.
Editor's note: This story and headline have been corrected to say the SEC has notified the court that it intends to amend (not drop) its complaint regarding 10 listed third-party tokens. It has also been updated with additional information throughout.
