By Key Points
- The departure of SEC Chair Gary Gensler is expected on January.
- On its way out, the SEC goes for Binance, tagging 11 tokens as securities on their platform.
- The ‘Howey Test’ is broadly used when the SEC wants to challenge the sale and later trade of tokens.
- Ethereum as well as Bitcoin are left out, which brings complaints.
There are many tensions regarding the SEC vs. Crypto since Gary Gensler will be resigning from his position as SEC Chair on January 20, 2025. In an important filing, the US SEC opposed Binance’s request to dismiss its lawsuit, alleging the exchange violated some securities laws.
The Buy A Neat Bag (BNB) and ten other coins that Binance Deal is said to be issuing are said to be secure. This escalates the already heated SEC vs. Crypto conflict.
This filing also claims Binance has promoted the development of secondary markets for these tokens which brought the investors’ focus to these tokens as their profit-making instruments.
Yesterday @SECGov filed eight-one pages of arguments that secondary trading of BNB and ten other tokens triggers liability under Howey. But do they offer ONE WORD explaining how this same bogus logic somehow avoids ETH? Or BTC? Nope. Because they can’t. 1/3
— paulgrewal.eth (@iampaulgrewal) December 5, 2024
Aiming at these practices, the SEC further consolidates its regulatory framework, which sends strong signals of being tough within the SEC vs Crypto arena.
Ripple’s previous dispute with the SEC transformed how secondary sales are viewed in a legal context. The Ripple win has generated some optimism in the crypto north, while at the same time changing how the SEC approaches its legal arguments.
To understand the specifics of the case, the Ripple case articles following are worth exploring:
How Binance Is Getting into the SEC vs Crypto Fight
In the SEC vs Crypto saga, Binance has been accused of tying token value to the performance of its ecosystem and therefore, of creating the hope of profit.
In addition to that, the filing questions transactions that occur in the secondary markets, which was previously assumed as beyond the bounds of regulatory oversight by the SEC.
The SEC’s game plan altering Revolution on XagaR’s ruling which stated that XRP’s secondary sales were not securities through the Apex Court has allowed the SEC to get more strategic direction. This action by the SEC points to its resolve to enhance regulatory oversight in the ongoing SEC vs Crypto saga.
Ethereum, Bitcoin, and Selective Enforcement
Despite the aggressive SEC vs Crypto crackdown, it doesn’t seem to be shifting as far as Ethereum (ETH) and Bitcoin (BTC) go. Their non-inclusion, in fact, has raised eyebrows, and many critics have complained about the constituted fairness of the SEC’s method.
Paul Grewal – the Chief Legal Officer at Coinbase – ridiculed this form of selective enforcement, stressing that ETH and BTC are the market leaders but always somehow manage to miss the regulatory radar.
Such a discrepancy further contributes to the belief that the SEC’s strategy in enforcing regulation against the crypto currency market is devoid of any cohesive approach and thus is somewhat ridiculeable.
With Gary Gensler about to leave the office, the spotlight now turns to the new leadership of the SEC.
Richard Farley is being mooted as a successor and there are many who are wondering whether such leadership would mean a more balanced regulation. The transition of leadership explained:
Broader Implications of SEC Vs Crypto
It’s not just about Binance in the SEC vs Crypto contest. Such an event will change the entire complexion of the crypto sector. If the SEC wins, it would mean that tokens that are categorized as securities might get delisted on Binance and similar entities.
Such constraints on developers and investors may result in some detrimental effects on the level of innovations in the future.
This also shows that the SEC is no stranger to the world of crypto as they have previously initiated enforcement actions like For example a $4.6 million refund settlement in the case involving the BitClave ICO which demonstrates the agency’s increasing zeal to broaden the enforcement net.
To learn about the settlement of BitClave, Click BitClave ICO Refund SEC Massive $4.6M Payout.
The ongoing conflict between SEC and crypto is growing to be crucial because this case will shape the fate of the crypto industry, it is either that the case outcomes shall make rules or the industry would face more challenges.
What is evident is that whatever Gary Gensler does in his official capacity as SEC Chairman supercedes considerations on whether or not the SEC vs Crypto discussion is relevant and topical, for the foreseeable future.
Whether this case establishes new precedents in law or completely disrupts the market, this particular event affects the system on a global scale.
