May 22, 2024
Circle Joins SEC vs. Binance Case, Asserts Stablecoins Not Securities
Latest Cryptocurrency News

Circle Joins SEC vs. Binance Case, Asserts Stablecoins Not Securities

Circle, the company responsible for the USD Coin (USDC) stablecoin, has entered the debate surrounding the United States Securities and Exchange Commission (SEC) case against Binance by asserting that stablecoins should not be classified as securities.

In a court filing, Circle argued that assets like Binance USD (BUSD) or USDC, which are pegged to the U.S. dollar, should not be considered securities because individuals who acquire these assets do not anticipate making a profit from their purchase. Circle’s position is that payment stablecoins lack the essential characteristics of an investment contract on their own.

The SEC initiated a legal action against Binance on June 5, alleging multiple legal violations. The SEC brought forth 13 charges against the crypto exchange, including claims of unregistered security sales related to BNB tokens and BUSD tokens. Additionally, the SEC accused Binance of failing to register as a broker-dealer clearing agency and conducting operations in the United States without proper authorization.

On September 22, Binance and its CEO Changpeng Zhao requested the court to dismiss the SEC lawsuit, asserting that the SEC had exceeded its jurisdiction in the lawsuit against them. In their petition, the legal team for Binance and Zhao argued that the SEC had not provided clear industry guidelines prior to suing the exchange and had retroactively imposed its authority over the sector.

In addition to cryptocurrencies and exchanges, the SEC has also declared non-fungible tokens (NFTs) to be securities. On August 28, the SEC filed charges against entertainment company Impact Theory for selling its NFT collection, contending that the NFTs were unregistered securities. Furthermore, on September 13, the SEC brought charges against the entity behind the Stoner Cats NFT collection, alleging that it facilitated the sale of unregistered securities by offering NFTs to the public.

Photo by Zachary Caraway

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