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The Securities and Exchange Commission (SEC) launched legal action against two major exchanges, Binance and BinanceUS, last week, leading to a reclassification of numerous altcoins as securities. Gary Gensler, the Chairman of the SEC, indicated in his remarks today that the Howey Test has largely yielded positive results for many altcoins. He further hinted at the flexible application of the four-point test on tokens, signifying his intent to intensify scrutiny on altcoins.
Recent Development from Binance
Binance’s lawyers made the initial formal objections and partial defenses on Monday (according to the US time zone) against the lawsuit. Ahead of Tuesday’s hearing concerning the sought-after restraining order, which would effectively freeze BinanceUS’s assets, a new filing from Binance argued for the rejection of SEC’s action.
Binance, Binance CEO Changpeng Zhao, BAM Trading, and BAM Management responded on Monday to the SEC’s original complaint and subsequent ban order. They argued, “The SEC’s request for a temporary ban should be rejected for several reasons, but most importantly: there is no risk to BAM’s customer assets. Indeed, apart from what the SEC has produced for its own purposes, there is no ’emergency’ here while the alleged securities law violations have been publicly and openly ongoing for years.”
Binance’s Stand: Prove It!
Binance’s lawyers stated, “SEC’s complaint summary does not identify a single instance of BAM customer assets being misused or abused.” Binance argued for the complete cancellation of the temporary ban, claiming that “the help that the SEC is asking for is inappropriate and disproportionate.” In a separate filing, BAM Management and BAM Trading claimed that operations would quickly cease if company funds were frozen, adding, “BAM won’t even be able to finance its defense against this lawsuit.”
In addition to the SEC’s demands about Binance, the issue of declaring 10 altcoins as securities was also brought to the agenda. Binance argued that the SEC needs to prove that the digital assets listed in its lawsuit are indeed securities.
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