Binance Urges Court to Recognize US Government’s Stance on USDC

Binance, a cryptocurrency exchange, and its former CEO Changpeng “CZ” Zhao have submitted a notice to the court regarding their case with the United States Securities and Exchange Commission (SEC). The purpose of this notice is to ascertain the government’s stance on stablecoins as securities. The filing, made on April 25 in the U.S. District Court for the District of Columbia, draws attention to the U.S. government’s argument in a criminal case involving Avraham Eisenberg, a participant in the Mango Markets exploit. Prosecutors in that case argued that USD Coin (USDC) should not be considered a security. This argument could potentially support Binance’s position in its civil case with the SEC.

It is important to note that the government’s argument seemed to be limited to USDC, while the SEC’s case against Binance encompassed other assets such as Binance Coin (BNB) and Binance USD (BUSD), another stablecoin. The lawsuit against Binance, filed in June 2023, alleged that the exchange and CZ facilitated the unregistered sale and offer of BNB and BUSD, as well as its programs like Simple Earn, BNB Vault, and staking.

At the time of writing, Binance’s case with the SEC was still ongoing. In November 2023, the exchange and CZ reached a settlement with the U.S. Justice Department, Treasury Department, and Commodity Futures Trading Commission, agreeing to pay $4.3 billion. As part of the settlement, Zhao resigned as CEO and pleaded guilty to one felony count. His sentencing is scheduled for April 30.

Even after the settlement, Binance continues to face scrutiny from regulators and authorities around the world. In Nigeria, two Binance executives were arrested when the firm announced its plans to halt all transactions involving the local fiat currency, the naira. Canadian authorities filed a class-action lawsuit against Binance on April 19, alleging that the exchange sold unregistered crypto derivative products.

The outcome of the case between Binance, CZ, and the SEC remains uncertain. Their notice to the court regarding the government’s position on stablecoins as securities, as demonstrated in a separate case, could potentially strengthen their arguments. The regulation and oversight of cryptocurrency exchanges like Binance continue to be a topic of concern for regulatory bodies globally, and the outcome of this case may have broader implications for the industry.