Binance, a cryptocurrency exchange, and its Former CEO Changpeng “CZ” Zhao have filed a notice to the court in their lawsuit against the Securities and Exchange Commission to clarify the government’s stance on stablecoins’ classification as securities.
Attorneys for Binance and CZ filed a notice of supplemental authority on April 25 with the U.S. District Court for the District of Columbia, presenting the court’s attention to the government’s allegations in its criminal case against Avraham Eisenberg, the exploiter of mango markets.
In this case, Prosecutors contended that there was “no factual basis” for classifying USD Coin as a security or sending the matter to a jury. As part of its case against Eisenberg, who was convicted on April 18 of fraud and market manipulation, the Justice Department cited USDC as a security.
Binance’s position in the civil lawsuit may be strengthened by the government’s assertion that a stablecoin was not a security that fell under the purview of the SEC’s regulations.
The argument appeared to be exclusive to USDC, although BNB and the stablecoin Binance USD (BUSD) were included in the SEC’s complaint against Binance.
June 2023 saw the filing of a lawsuit alleging that CZ and the cryptocurrency exchange permitted unregistered sales and offers of BNB and BUSD, along with Binance’s Simple Earn, BNB Vault, and staking programs.
At the time of publication, Binance’s SEC complaint was still pending. However, in November 2023, the exchange and CZ reached a $4.3 billion settlement with the US Justice Department, Treasury Department, and Commodity Futures Trading Commission.
As part of the agreement, Zhao resigned as the cryptocurrency exchange’s CEO and entered a guilty plea to one count of felonies. On April 30, he is expected to be sentenced. Two Executives were arrested in Nigeria amid plans to halt naira transactions. Authorities in Canada filed a lawsuit alleging the sale of unregistered crypto derivatives.
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