BUSD tokens and stablecoin are not securities, judge says

District of Columbia Court Judge Amy Berman ruled on Monday that tokens and the BUSD stablecoin are not securities, as alleged by the U.S. Securities and Exchange Commission (SEC).

In a court document issued in the context of the litigation between the SEC and Binance, the largest bitcoin (BTC) and cryptocurrency exchange on the market, Judge Berman indicated that Some of the motions to dismiss were granted filed by the company’s legal team.

More specifically, Judge Berman ruled that digital tokens are not securities, nor is BUSD, which became one of the largest stablecoins in the entire market. The judge also ruled out sales of Binance’s cryptocurrency, BNB, on secondary exchanges, correspond to the negotiation of securities.

For Binance, the above dismissals are interpreted as a “victory for the industry” and “a blow to the SEC’s ongoing efforts to regulate through enforcement.”

“The United States District Court for the District of Columbia issued an opinion dismantling several key pillars of the SEC’s misguided cryptocurrency enforcement campaign,” Binance said.

In her ruling, Judge Amy Berman said that “there is no question that the SEC’s position has evolved and that it has not adopted a comprehensive regulatory approach to the industry.”

He also asserted that if the SEC’s decision is followed and BNB, BUSD, and other exchange products are found to represent an investment contract under federal securities laws, it will create a scenario “that could have significant implications for the cryptoasset industry at large, and how issuers or platforms market digital assets.”

“But the SEC’s lawsuit seeking such a ruling is a routine exercise of that agency’s enforcement authority,” the judge said.

This is not the first time that a US federal judge has clarified that cryptoassets are not securities. In 2023, Judge Analisa Torres ruled that the XRP asset, issued by the Ripple Labs company, is not a security, as the SEC has suggested since 2020, when the legal battle between both entities began.

However, the SEC has remained steadfast in its narrative that most cryptocurrencies, with the exception of bitcoin (BTC), are securities and therefore are assets that must be under the supervision of that US regulatory agency.

The rest of the litigation continues

Even though Judge Amy Breman dismissed some of the SEC’s charges and allegations against Binance, Most of the charges are still pending in court.

As the judge explains, “the majority” of the litigation against the world’s largest bitcoin and cryptocurrency exchange is still going forward. This, recalling that for the SEC, this platform violated the Securities Act of 1933 and the Securities Exchange Act of 1934 “by offering and selling cryptoassets and related programs without a registration statement.”

Also, for “operating cryptocurrency trading platforms without registering as an exchange, as a broker-dealer or dealer, or as a clearing agency; and making false statements to investors and engaging in acts and practices that operated as fraud to buyers.”

Overall, charges related to the BNB initial coin offering (ICO) and continued sales of this asset on Binance after the ICO will go forward. The SEC’s claim against Binance regarding the BNB Vault product will also proceed.

Likewise, the claim that Binance will proceed offered and sold its staking program as an investment contract. While claims that Binance failed to register in the US under the Exchange Act will also continue.

The judge also specified that claims against Changpeng Zhao, former CEO of Binance and its main founder, will proceed. It should be remembered that the SEC accused this businessman of being the person in control of the exchange and of violating the Exchange Act. Also, that CZ is serving a four-month prison sentence.

Finally, the judge ruled that the claims that the Binance exchange will proceed violated anti-fraud provisions which are established in the United States Securities Law.

«Some challenges»

In this way, the judge shows that Binance still has a way to go before winning or losing to the SEC’s claims. The exchange itself admits that there are “some challenges” left to face.

“The court allowed some of the SEC’s claims to go forward, such as the claim that direct sales of BNB are securities transactions. However, the burden of proof is on the SEC to show, among other things, that customers purchased these tokens as investments rather than for other uses,” Binance says.

Showing optimism, they highlight that the judicial decision to go ahead in most of the case, but dismissing some accusations“More than a legal victory for Binance, it recognizes that there are critical limits to the SEC’s regulatory authority over the cryptocurrency industry.”

“This decision is a positive step toward safeguarding the integrity of the cryptocurrency market and calls for fair and consistent regulation to avoid stifling growth and innovation,” the exchange said. “As this case moves forward, Binance remains steadfast in its commitment to defend itself against the SEC’s overzealous and ill-conceived attempts to regulate nearly the entire cryptocurrency market,” it concluded.