Circle, the issuer of the prominent stablecoin USDC, has filed an amicus curiae brief with the court in the lawsuit filed by the Securities and Exchange Commission (SEC) against Binance, the world’s largest cryptocurrency exchange.
The filing was made under the leadership of Heath Tarbert, the former chairman of the Commodity Futures Trading Commission (CFTC) and the current Chief Legal Officer of Circle, which is another federal regulator that has filed a lawsuit against Binance. The filing stated that the existing financial trading laws do not cover stablecoins, which have their value indexed to other assets.
Months after the SEC filed the lawsuit, Circle, as an amicus curiae, argues that stablecoins such as BUSD and its own USDC, which have their value indexed to the US dollar, are not securities because their users do not expect any profit from independent purchases.
In its filing to the court, Circle stated, “Payment stablecoins do not have the essential features of an investment contract on their own, meaning that they fall outside the jurisdiction of the SEC. Decades of case law support the view that a sale of an asset alone is not sufficient to create an investment contract separate from the promises or obligations of the seller.”
Intense SEC Pressure on Binance and the Cryptocurrency Sector
In June, the SEC filed a lawsuit against Binance, accusing it of violating numerous laws by facilitating trading in altcoins such as Solana’s SOL, Cardano’s ADA, and Binance’s stablecoin BUSD, claiming that they create unregistered securities. Binance, the world’s largest crypto exchange, along with its competitors like Coinbase, has been defending itself against accusations of violating heavy US financial laws, becoming the main target of the most significant lawsuit in the crypto sector.
The SEC argues that BUSD was sold as an investment contract because Binance marketed it to offer returns through reward programs. Binance.US and CEO Changpeng Zhao (CZ) filed a comprehensive application last week to dismiss the lawsuit filed by the SEC, claiming that the regulator has the power to impose sanctions on cryptocurrencies without obtaining authorization from the US Congress.
