Crypto Carnage Looms: SEC Leans On Terraform Case To Hammer Coinbase, Binance

The U.S. Securities and Exchange Commission (SEC) is utilizing a recent victory in its case against Terraform Labs to bolster its ongoing legal battles with major cryptocurrency exchanges Binance BNB/USD and Coinbase Global Inc. COIN

In a legal document related to its lawsuit against Coinbase, the SEC cited a favorable judgment from the Southern District of New York regarding Terraform Labs.

This judgment concluded that UST, LUNA, wLUNA and MIR tokens are, in fact, securities.

"The Terraform court resolved in the SEC's favor issues relevant to the consideration of Defendants' motion in this case," the SEC stated, referencing Coinbase's previous request for a favorable judgment.

This latest submission is part of the SEC's strategy to counter Coinbase's earlier motion.

Interestingly, the SEC's complaint against Coinbase does not mention UST USTC/USD, LUNA LUNA/USD, wLUNA and MIR MIR/USD tokens.

Instead, it focuses on a different group of tokens, including Solana SOL/USD, Cardano ADA/USD, Polygon MATIC/USD, Filecoin FIL/USD, The Sandbox SAND/USD, Axie Infinity AXS/USD, Chiliz CHZ/USD, FLOW FLOW/USD, Internet Computer ICP/USD, Near Protocol NEAR/USD, VGX VGX/USD, DASH DASH/USD, and Nexo NEXO/USD, which the SEC argues should be classified as unregistered securities.

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Simultaneously, in a related lawsuit against Binance, the SEC is attempting to leverage the Terraform Labs judgment. In a separate filing, the agency requested a Washington D.C. court to consider the Terraform ruling while evaluating Binance's request to dismiss the case.

"The court’s analysis of the Terraform defendants' so-called 'stablecoin' UST is particularly relevant to this Court's consideration of Defendants' arguments concerning Binance's so-called 'stablecoin' BUSD, and Defendants' stalking-as-a service, BNB Vault, and Simple Earn programs," the filing stated.

The SEC pointed out Terraform Labs used arguments similar to Binance's current defense, attempting to distinguish the sale of its tokens from the development and promotion of the Anchor protocol.

The SEC saw parallels in Binance's offering of BUSD and staking-as-a-service, BNB Vault and Simple Earn program.

The agency believed this strengthened its position for rejecting the defendant's motions to dismiss.

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