Binance Files Joint Response To US SEC’s Terra Lawsuit Supplemental Authority

Attorneys for defendants Binance, Binance.US, and co-founder Changpeng “CZ” Zhao have strongly denied the U.S. Securities and Exchange Commission (SEC)’s claims about the relevance of the Terra lawsuit’s summary judgment and findings in this case. They added that the SEC is attempting to contort Terraform lawsuits of 2021 and 2023 to make implausible arguments.

Binance Response to SEC’s Terra Supplemental Authority

In the latest development in the US SEC v. Binance Holdings lawsuit, defendants have filed a joint response to the U.S. SEC’s notice of supplemental authority. The SEC directed the court’s attention to orders in the Terraform lawsuit that parties violated securities laws and digital assets mentioned are securities under Howey Test.

“None of the points raised in the SEC Notice about Terraform II save its claims in this action any more than the SEC’s arguments based on SEC v. Terraform Labs Pte. Ltd,” as per the filing. Also, even if the SEC’s position were permissible in other circuits, binding precedent in this circuit mandates “post-purchase commitments” and directs courts to apply a test that can “distinguish securities from non-securities.”

Binance argues that the SEC’s non-test has been adopted in Terraform I and II to an extent that cannot distinguish securities from Pokémon cards. Also, the defendants said the court’s view of the Howey Test in Terra lawsuit is incorrect as it clearly states that splitting an investment transaction or scheme across multiple contracts still constitutes an investment contract.

Moreover, the SEC claims that BUSD itself constitutes a security is irrelevant to the decision in the Terra lawsuit. Also, the CFTC’s claims that BUSD is a commodity subject to that agency’s enforcement authority, which contradicts the SEC’s argument.

Binance and Binance.US argue that the staking service offered to investors doesn’t promise to pay anything, but provides services to allow access to third parties’ blockchain consensus validation mechanisms.

Moreover, Terraform lawsuit’s discussion of Regulation S has no bearing on this case. Regulation S provides a regulatory safe harbor—it does not purport to determine the extraterritorial reach of the securities laws. Thus, the SEC’s arguments to consider Terra lawsuit in this case are irrelevant to BUSD, digital assets mentioned in the case, and securities law violation.

Also Read:

• Bitfinex Exchange Thwarts $15 Billion Worth Attack on XRP Tokens on Platform
• Bitcoin Price Records Worst Streak After ETF Approval, BTC At $34,000 Possible?
• Celestia Network’s TIA Price Up 50% In A Week, What’s Behind the Rally?