The United States (US) Securities and Exchange Commission (SEC) has foreshadowed its intention to amend its complaint against Binance, signaling a significant shift in the ongoing legal battle. The move could impact allegations that certain third-party tokens traded on Binance’s platform were securities, which has been a focal point in the case.
Earlier this month, during a court hearing, questions were raised about the potential implications of a ruling on specific tokens. The SEC's decision to amend its complaint appears to be a strategic response to these discussions, as detailed in a court filing.
It has been over a year since the SEC filed charges against Binance and two months ago former Binance CEO, Changpeng Zhao (CZ), was sentenced on money laundering charges. Binance had sought to dismiss the SEC claim, which was partially successful and resulted in a rejection of the SEC’s broad assertion that crypto tokens themselves are inherently investment contracts subject to SEC oversight.
The SEC has informed Binance about its plan to seek permission to amend the complaint. This amendment could potentially sidestep the need for the court to rule on the allegations related to third-party tokens at this stage.
The third-party tokens listed in the Binance complaint include SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI. These digital assets, issued by companies other than Binance, have been alleged by the SEC to be unregistered securities. However, the developers and issuers of those tokens are not party to the Binance complaint creating potential uncertainty over the precedent value of any judgment handed down and the listing of these tokens by other exchanges.
The legal saga underscores the complex regulatory landscape facing the crypto industry, and highlights the imperfect nature of the Court process in trying to provide legal clarity to crypto market participants. It is unclear whether the SEC’s mooted amendment signals a broader shift in its litigation strategy or approach to regulation of digital assets. For now, it’s a case of reading the tea leaves while the SEC prepares a fresh pot for Binance.
By Steven Pettigrove and Luke Misthos
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