SEC Amends Binance Lawsuit, Drops Security Claims Against Solana and Other Cryptocurrencies

The U.S. Securities and Exchange Commission (SEC) has revised its lawsuit against Binance, no longer alleging that the cryptocurrency exchange offered third-party securities in violation of U.S. laws.

SEC's Legal Strategy

A recent court filing disclosed that the SEC informed the defendants of its intent to seek permission to amend its complaint, specifically regarding the "Third Party Crypto Asset Securities." This amendment means the court will not need to rule on the sufficiency of allegations related to these tokens at present.

Background of the Lawsuit

Last summer, the SEC sued Binance, Binance.US, and its former CEO Changpeng Zhao. The lawsuit accused the exchanges of providing unregistered brokerage, trading, and clearing services in the U.S. for digital asset securities. Other exchanges, such as Coinbase and Kraken, have faced similar charges.

Securities Classification

The SEC's original lawsuit classified several cryptocurrencies, including SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI, as securities. The recent amendment is expected to change these classifications.

Zhao is currently serving a four-month sentence for a sanctions violation charge brought by the Department of Justice and the Treasury Department, which is separate from the SEC's case.

Court Ruling on Cryptocurrencies

In June, a U.S. federal court ruled that cryptocurrencies and secondary sales of the BNB token do not qualify as securities. Judge Amy Berman Jackson stated that the SEC's claim that tokens are the "embodiment of the investment contract" rather than the subject of it confused the issues before the court. She clarified that the ruling does not determine whether crypto assets themselves are securities.

At the time of writing, SOL, ADA, and MATIC have dropped between 2% to 6% in the last 24 hours, according to The Defiant’s feed.