The U.S. Securities and Exchange Commission (SEC) has indicated its intention to amend its complaint against Binance, potentially dropping charges related to third-party tokens such as Solana’s SOL and Polygon’s MATIC. This development emerged from a court filing early Tuesday morning.
Background of the Case
The SEC’s lawsuit against Binance has been a significant legal battle in the cryptocurrency world. The agency initially alleged that Binance and its affiliates, including Binance.US and founder Changpeng Zhao, offered unregistered broker, trading, and clearing services in the U.S. for digital asset securities. The SEC classified ten tokens—SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI—as securities in its complaint.
Recent Developments
In the court filing, the SEC informed the defendants that it “intends to seek leave to amend its complaint, including with respect to the ‘Third Party Crypto Asset Securities’… obviating the need for the Court to issue a ruling as to the sufficiency of the allegations as to those tokens at this time.” This suggests that the SEC may be reconsidering its stance on whether these third-party tokens qualify as unregistered securities.
This change in position by the SEC follows a hearing on July 9, where attorneys for Binance interpreted Judge Amy Berman Jackson’s June 28 ruling as moving third-party tokens out of the case. However, the Judge clarified that this was not her intention.
Response from the Defense
The defense has expressed the need to review the amended complaint before proceeding with discovery. “Until defendants have a set of proposed amended allegations in front of them, it is premature and unreasonable for the SEC to expect them to agree to conduct merits discovery for claims on which the SEC may soon seek leave to amend its allegations,” the filing stated.
Impact on the Cryptocurrency Market
The potential dropping of security claims for these tokens has caused significant discussion within the crypto community. The SEC’s initial classification had placed substantial regulatory pressure on these assets. However, the amendment to the lawsuit could alter their legal status and market perception.
At the time of writing, SOL, ADA, and MATIC have seen a decline of between 2% to 6% in the last 24 hours, according to The Defiant’s feed.
Previous Legal Rulings
In June, a U.S. federal court ruled that cryptocurrencies and secondary sales of the BNB token do not qualify as securities. Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia stated, “No one should read this case as deciding that crypto assets themselves are or are not ‘securities’; that is not the question presented.”
The SEC’s decision to amend its complaint against Binance, particularly regarding third-party tokens, marks a significant development in the ongoing legal battles within the cryptocurrency industry. As the case progresses, the outcome could have far-reaching implications for the classification and regulation of digital assets in the U.S.
