Judge dismisses part of SEC case against Binance, big win for secondary market sales of crypto

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US District Judge Amy Berman Jackson dismissed the SEC’s claim that secondary sales of BNB token qualify as securities.
Bulk of the agency’s lawsuit against Binance can proceed per the Judge’s ruling.
The Judge cited a ruling from the Ripple case where the economic reality of transactions matters when applying Howey Test.
BNB lost nearly 3% of its value in the past week, Binance’s native token trades at $571.40 on Saturday.

A US Judge offered market participants clarity on the secondary market sales of digital assets and dismissed part of the Securities and Exchange Commission’s (SEC) lawsuit against Binance. In the lawsuit the SEC claims that the secondary market sales, or sales on an exchange, of the native token Binance Coin (BNB) qualify as a security.

The ruling Judge cited a ruling from the SEC vs. Ripple lawsuit, marking a big win for crypto traders.

Bulk of SEC lawsuit against Binance can proceed

Judge Amy Berman Jackson dismissed part of the SEC’s lawsuit against Binance on Friday. The ruling marks a milestone for crypto traders; it was determined that secondary sales of Binance’s BNB token do not qualify as securities under the Howey Test.

Of 13 counts, 10 will proceed entirely and two partically. One count is entirely dismissed post Judge Jackson’s ruling. The count that was entirely dismissed is related to the sales of Binance USD (BUSD), a stablecoin that is now partially defunct.

SEC vs. Binance

Judge Jackson says that the government’s reliance on the assertion that crypto assets are the embodiment of investment contracts is not enough to treat BNB’s secondary market sales as securities. Ripple proponent attorney Bill Morgan explains Judge Jackson’s ruling and why it matters in a recent tweet on X:

So to sum it up, this is what judge Amy Berman Jackson in her SEC v Binance decision thought about aspects of the summary judgement decision of Judge Torres in SEC v Ripple:

1. Judge Torres observations on the nature of the token itself were “clarifying and persuasive”;

2.…

— bill morgan (@Belisarius2020) June 29, 2024

In her ruling in the SEC vs. Ripple lawsuit, Judge Analisa Torres says that secondary market sales of XRP do not satisfy the Howey test and therefore are not investment contracts.

The SEC has been pushing the theory that crypto tokens may not be securities, they are investment contracts. Judge Jackson’s ruling brings relief to crypto traders on the issue of secondary market sales of cryptocurrencies and concludes that assets are not investment contracts since they do not satisfy the Howey test.

BNB loses 3% value this week

Binance coin (BNB) has been in a state of decline since June 6 high of $721.80. BNB dropped to June 24 low of $551.20. The momentum indicator Moving Average Convergence Divergence (MACD) shows underlying negative momentum in BNB’s price trend.

BNB could rally towards $591.50, the 23.6% of the Fibonacci retracement level of the decline from June 6 to 24.