Judge shows skepticism about BUSD as an investment contract

The highly anticipated hearing of the SEC's lawsuit against Binance took place today in Washington, as the trial revealed several challenges for the leading exchange.

Last year, the SEC accused Binance and its US arm of multiple violations, including inflating trading volumes, misusing customer funds, and misleading investors about market controls, complicating the regulatory landscape of cryptocurrencies even more.

In presiding over the case, Judge Berman Jackson took a direct approach, bypassing prepared arguments and asking pointed questions. His skepticism on the need for a contract in an investment contract, drawing on the “scheme” language of the landmark Howey case, set a critical tone for the proceedings.

Judge Jackson expressed doubt about the major issues doctrine and fair notice arguments advanced by the SEC, highlighting the ongoing debate over the scope of the SEC's authority versus that of the Commodity Futures Trading Commission. (CFTC).

The Binance case, different from the Coinbase scenario, raised unique questions. Judge Jackson's skepticism regarding the offering of the BUSD stablecoin as an investment contract was evident. However, she seemed more open to the argument that Binance's BNB token might have initially been offered as an investment contract. This led to a broader discussion on the status of tokens in secondary markets, challenging the SEC's position that a token perpetually embodies an investment contract.

The court session ended without a clear resolution on the SEC's jurisdiction over tokens like Filecoin, not to mention other major tokens like Cardano or Solana. The judge resisted holding mini-trials for each token mentioned in the complaint, especially when its issuers were not part of the case.

As the legal battle unfolds, its results will shape the future of cryptocurrency regulation, with the world watching closely.

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