A look at the SEC rebuttal of Binance’s motion to dismiss
On June 5, 2023, the Securities and Exchange Commission ( SEC ) sued Binance and its CEO Changpeng Zhao (CZ) for billions of dollars. This week, the SEC reiterated and clarified its claims in a rebuttal to Binance ’s formal motion to dismiss that lawsuit. The SEC’s lawsuit alleges that Binance raised money by selling its two tokens, BNB and BUSD, in illegal securities offerings to many US investors. That fundraising, plus untold millions from selling other unregistered securities, helped it earn at least $11.6 billion in revenue. Explaining its reasoning, the SEC focused on the Howey Test, which US courts commonly use to determine whether someone illegally sells crypto assets. The Howey Test refers to a 1946 US Supreme Court ruling, SEC v. W.J. Howey Co. Deciding in the SEC’s favor, the Supreme Court defined an investment contract as a transaction that meets these four conditions: An investment of money, Into a common enterprise, With the reasonable expectation of profit, ...