Bitcoin (BTC) price has lost the $40,000 mark again after a long period, dropping to $39,431. The feared scenario for days is becoming a reality. The signal for the last correction that could have devastating consequences for altcoins was given with the drop on January 12. The Binance hearing has also concluded. Here’s what happened in the last few hours.
Bitcoin Falling
As this article was being prepared, the BTC price was at $39,780, having recently dropped to $39,431. We had mentioned last week that the break of the rising parallel channel on January 12 could lead to a deeper correction towards $38,500. This scenario seems to be unfolding in the coming hours.
The price gap from the CME exchange has been filled, but this drop has also set the stage for the cumulative value of cryptocurrencies to retreat to the $1.4 trillion support level. The daily close that will occur hours later and the opening of the Asian markets could accelerate the sales. Spot Bitcoin ETFs started the day with a decline while Grayscale continues to send thousands of BTC to the Coinbase exchange due to GBTC redemptions.
Details of the Binance Hearing
The hearing was in two parts, and we did not see a judge as crypto-friendly as in the Coinbase hearing. The Binance case is very complex, but the main focus in today’s hearing was on the investment contract/security and their unregistered sales.
The first part was summarized by a user named metalawman who closely follows crypto cases:
- Judge Berman Jackson set aside prepared arguments and went straight to questions.
- She started with the defense team. She seemed doubtful that an investment contract truly required a contract.
- She focused on the “scheme” language in Howey.
- Like Judge Failla, Judge Jackson indicated that she was not convinced by the Major Problems Doctrine argument.
- She also expressed doubts about the Legal Process arguments related to fair notice.
- There was a lot of back and forth about where the SEC’s authority ends and the CFTC’s begins, with no clear conclusion.
In the second part and overall assessment, he wrote:
- The judge approaches the idea that the BUSD stablecoin is presented as an investment contract with skepticism.
- The judge seems open to the argument that Binance initially presented the BNB token as an investment contract.
- The judge appears uncomfortable with the idea that a token, even if initially presented as an investment contract, remains a security when traded indefinitely in a secondary market.
- The SEC lawyer claims that the token “embodies” the investment contract – which seems to contradict previous statements that the token is nothing more than lines of code.
- The judge opposed the idea of mini-hearings regarding whether the other 10 tokens listed in the complaint were sold as investment contracts.
- The judge asked the SEC where the “line” is between tokens that are and are not investment contracts – because there are people buying and selling these assets and they need to know.
- It was somewhat disappointing that Binance’s lawyers did not argue that crypto tokens cannot be investment contracts if they do not carry rights over the underlying business‘s income, assets, or profits.
