Binance Taps Unrelated Case to Strengthen Defense Against SEC
Binance is turning to an unrelated case to bolster its defense against the US Securities and Exchange Commission (SEC). On April 26, Binance and associated parties submitted a government document from a case involving Mango Markets exploiter Abraham Eisenberg, who was recently convicted by a jury.
In the document, Binance’s defense team highlighted a specific paragraph where the US government clarified its stance on whether the stablecoin USDC should be considered a security. Attorney Damian Williams, speaking on behalf of the US government, stated that there is no factual basis for treating USDC as a security because holders do not expect profit due to its ties to the US dollar. This argument could potentially help in avoiding the classification of MGNO Perpetuals, which are based on the value of USDC, as a mixed swap.
While this argument supported the government’s case in the Eisenberg trial, it could also benefit defendants facing securities violations in other cases, such as Binance. However, the relevance of this case may have its limitations as each SEC case against Binance focuses on different offerings.
The recent filing is specifically pertinent to the SEC’s civil securities lawsuit against Binance Holdings Limited, its former CEO Changpeng Zhao, and related companies. It does not relate to a criminal case where Zhao has pleaded guilty and is awaiting sentencing.
The insights from the Eisenberg case could potentially assist defendants in other securities-related lawsuits, including Coinbase, for similar reasons. The SEC has been actively pursuing legal action against various cryptocurrency exchanges, with lawsuits filed against Coinbase and Binance in June 2023, followed by a case against Kraken in November 2023.
