Binance, SEC Clash in Heated Courtroom: Judge Questions Key Argument

Binance banner and a gavel

The legal battle between Binance and the U.S. Securities and Exchange Commission (SEC) heated up during a four-hour oral argument session in Washington District Court. Both sides presented their cases before Judge Amy Berman Jackson, with notable moments of tension and frustration emerging.

The legal battle between Binance and the U.S. Securities and Exchange Commission (SEC) intensified during a recent court hearing. Judge Amy Berman Jackson challenged Binance’s legal team, raising doubts about their interpretation of investment contracts and hinting at potential frustration with repetitive arguments. Additionally, both Binance and Coinbase, facing similar SEC lawsuits, invoked the major questions doctrine, adding another layer of complexity to the ongoing legal battles.

Binance’s Argument

A central point of contention arose when Binance‘s legal team repeatedly emphasized their argument that investment contracts, as defined by the Howey Test, can only exist when a formal contract is present. Judge Jackson reportedly expressed visible frustration with this stance, urging them to move beyond this specific interpretation and delve deeper into the broader legal framework surrounding investment contracts.

“The court seems unconvinced by Binance’s narrow definition of investment contracts,” remarked a legal analyst following the hearing. “Judge Jackson’s push for a wider interpretation suggests she may be open to the SEC’s arguments regarding token offerings potentially qualifying as securities.”

SEC’s Allegation

The SEC alleges that Binance offered unregistered securities through its initial coin offerings (ICOs) conducted between 2017 and 2018. Binance vehemently denies these accusations, maintaining that their tokens do not meet the criteria for investment contracts.

The SEC filed charges against Binance in June 2023, alleging the exchange offered unregistered securities through various tokens, including BNB and BUSD. Binance vehemently denies these allegations. During the hearing, Judge Jackson appeared to grow impatient with Binance’s repeated emphasis on their interpretation of investment contracts requiring a formal contract to exist.

Binance Understanding of Howey’s Test

“We’re going to be wasting a lot of time if we comb through the Howey factors for each alleged asset,” Judge Jackson pointedly remarked, referencing the legal framework used to determine whether an investment qualifies as a security. She further expressed doubts about Binance’s understanding of the Howey test itself, stating, “I don’t think that is what it says.”

This exchange suggests potential challenges for Binance’s defense strategy and highlights the judge’s willingness to engage in critical examinations of their arguments.

Adding another layer of complexity, both Binance and Coinbase have invoked the major questions doctrine in their respective lawsuits. This doctrine posits that courts should defer to Congress on matters of significant political or economic consequence, potentially limiting the SEC’s authority in these cases.

No Rulings Yet

The court hearing did not result in any immediate rulings, leaving the future of both lawsuits uncertain. However, Judge Jackson’s pointed questions and the invocation of the major questions doctrine underscore the intricate legal complexities surrounding these cases and the potential for prolonged legal battles ahead.

While the judge did not provide any immediate rulings, her pointed questions towards Binance’s legal team suggest a potentially challenging road ahead for the cryptocurrency exchange. The court is expected to issue a written decision at a later date, which will have significant implications for both Binance and the broader cryptocurrency industry.

Author: Jinka

Jinka is a self-trained crypto journalist, passionate about happenings in the industry.