SEC Backs Down on Classifying Major Crypto Tokens as Securities in Binance Lawsuit

LUCKNOW (CoinChapter.com) — The United States Securities and Exchange Commission (SEC) has decided to temporarily set aside its allegations that several major cryptocurrencies are unregistered securities in its ongoing lawsuit against Binance.

In a joint status report filed early Tuesday, the SEC announced its intention to amend its complaint against Binance. This amendment would shelve allegations against “third-party crypto assets,” including popular tokens like Solana (SOL), Cardano (ADA), and Polygon (MATIC).

Is It Just A Temporary Relief For Tokens?

While this move offers some breathing room for these cryptocurrencies, it doesn’t mean they’re completely off the hook. The SEC hasn’t dropped the allegations or had them dismissed by the judge. Instead, the regulator is essentially putting a pin in the issue for now.

The SEC wrote in the filing that this amendment would be “obviating the need for the Court to issue a ruling as to the sufficiency of the allegations as to those tokens at this time.” In simpler terms, this means the SEC has agreed to postpone the matter. However, the judge overseeing the case might still eventually need to rule on whether these tokens meet the threshold to be considered securities.

The original SEC complaint, filed in June 2023, also named Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and Coti (COTI) as unregistered securities.

Behind the SEC’s Original Complaint

The lawsuit against Binance includes 13 charges, accusing the exchange and its CEO Changpeng Zhao of commingling customers’ funds and trying to evade U.S. securities laws with “sham controls” for determining who can do business with the firm.

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Last month, the judge granted a motion from Binance to dismiss charges tied to secondary sales of Binance’s BNB exchange token and its Simple Earn program. However, other charges, including those against the Binance.US, will proceed.

We have always utilized the limited guidance that the SEC has offered to the crypto industry to operate our business in a compliant way. The fight continues.

Binance.US said.

The next steps in the case hinge on whether the SEC and Binance can agree on a schedule for discovery or the process of turning over evidence. The SEC wants to begin discovery immediately after filing its amended complaint. However, Binance has refused, arguing that they cannot agree to start discovery without first reviewing the SEC’s proposed amended complaint.

Binance prefers to meet within two weeks after the SEC’s amended proposal. The exchange’s lawyers argue that “it is premature and unreasonable for the SEC to expect them to agree to conduct merits discovery for claims on which the SEC may soon seek leave to amend its allegations.”

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