Binance could strengthen its defense against the US Securities and Exchange Commission (SEC) by drawing on an unrelated case.

On April 26, Binance and related parties filed a government document from an unrelated case against Mango Markets exploiter Abraham Eisenberg, who was convicted by a jury on April 18.

The government’s argument

Binance’s defense team drew attention to a specific paragraph in which the US government expressed its position on whether a particular stablecoin, USDC, is a security.

On behalf of the US government, attorney Damian Williams stated that there “is no factual basis for treating USDC as a security,” adding that “holders of USDC do not expect profits from the token” because of its ties to the US dollar.

The argument closed off a possible exception that would prevent classifying MGNO Perpetuals, which are based on the value of USDC, as a mixed swap.

The argument aided government prosecutors in the Eisenberg case but could benefit defendants facing securities violations in other cases, such as Binance.

Limitations of the argument

The relevance of the case may have limits. The SEC has charged Binance with various securities violations, but each case focuses on different offerings.

Furthermore, the latest filing is only relevant to the SEC’s civil securities suit against Binance Holdings Limited, its former CEO Changpeng Zhao, and related companies. It does not pertain to a criminal case in which Zhao has pleaded guilty and awaits sentencing.

The Eisenberg case could also help defendants in other securities cases, including Coinbase, for similar reasons. The SEC initiated lawsuits against Coinbase and Binance just days apart in June 2023, and it has advanced various other suits against other exchanges, including Kraken in November 2023.


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