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Cryptocurrencies and secondary sales of the BNB token do not constitute securities, a United States federal court ruled in another significant victory for the crypto industry.
Cryptocurrencies and secondary sales of BNB (<a href="https://cointelegraph.com/binance-coin-price-index">BNB</a>) do not constitute securities offerings, according to Judge Amy Berman Jackson of the U.S.&nbsp;District Court for the District of Columbia.
In a significant win for Binance.US, the judge dismissed several claims made by the U.S. Securities and Exchange Commission, <a href="https://www.binance.com/en/blog/regulation/us-federal-judge-rejects-main-claims-by-sec-against-binance-6713897865359416262?hl=en" target="_blank" rel="noopener nofollow">according</a> to a July 2 announcement by Binance:&nbsp;
<blockquote data-ct-non-breakable="true">
 “The court held that the SEC failed to plead that purchasers in secondary market sales acquired BNB with an expectation of profits, rather than for other uses, which is a key criterion for passing the Howey test (a legal framework outlined by the Supreme Court to determine whether a transaction qualifies as an investment contract).”
</blockquote>
The SEC started cracking down on crypto exchanges after the collapse of FTX to avoid a similar meltdown. However, the regulator’s approach has been widely criticized for potentially stifling innovation.
The ruling could have positive implications for other ongoing legal battles, such&nbsp;<a href="https://cointelegraph.com/learn/the-sec-vs-ripple-lawsuit-everything-you-need-to-know">the SEC vs. Ripple lawsuit</a>.
Related: <a href="https://cointelegraph.com/news/sec-commissioner-mark-uyeda-calls-out-problematic-crypto-filing-approach">Commissioner Mark Uyeda calls SEC’s approach to crypto filings ‘problematic’</a>
<h2 data-ct-non-breakable="true" id="cryptocurrencies-are-not-securities">Cryptocurrencies are not securities</h2>
In a major win for the crypto industry, Judge Jackson ruled that cryptocurrency tokens themselves are not securities.
According to the ruling, this means that cryptocurrencies are not investment contracts that fall under the purview of the SEC, according to the announcement:
<blockquote data-ct-non-breakable="true">
 “The court found that the SEC’s approach muddied the issues and ignored controlling United States Supreme Court precedent. The court also emphasized that the focus should be on whether the circumstances surrounding each transaction render it a securities transaction.”
</blockquote>
The judge further ruled that the focus should be on the circumstances of each token sale, not the cryptocurrencies themselves, which are not considered securities.
The ruling comes as a sign of relief for investors. The SEC previously said that <a href="https://cointelegraph.com/news/sec-labels-61-cryptocurrencies-securities-after-binance-suit">68 cryptocurrencies are securities</a>&nbsp;and added BNB to the list, along with nine other cryptocurrencies, in June 2023 during its lawsuits against Binance and Coinbase.
Related: <a href="https://cointelegraph.com/news/cathie-wood-endorses-trump-crypto-friendly-candidate">Cathie Wood’s vote is cementing Trump as a ‘pro-innovation’ crypto-friendly candidate</a>
<h2 data-ct-non-breakable="true" id="sec-vs-binance">SEC vs. Binance</h2>
In June 2023, the <a href="https://cointelegraph.com/news/sec-sues-binance-in-us-district-court-for-unregistered-securities-operations">SEC sued Binance</a>&nbsp;and Coinbase for alleged securities violations. In the lawsuit against Binance, the SEC alleged that the company and its founder, Changpeng Zhao, had misappropriated billions of user funds.
Despite no evidence of misappropriation, <a href="https://cointelegraph.com/news/binance-cz-cftc-settlement-court-order-pay-penalty">Binance was charged</a> with violating Anti-Money Laundering laws and settled to <a href="https://cointelegraph.com/news/binance-market-share-recovery-post-us-settlement">pay a $4.3 billion fine</a>, one of the largest criminal fines in history.
The next court hearing for the Binance vs. SEC case is scheduled for July 9.
The U.S. wing of the world’s largest exchange has <a href="https://cointelegraph.com/news/binance-us-sec-legal-battle">expressed readiness for</a> an extended period of legal discovery. It said in a June 2 X post:
<blockquote data-ct-non-breakable="true">
 “On Friday, the Court decided that the SEC’s case against Binance.US will continue. We were prepared for this and look forward to having this case move forward in the judicial process.”
</blockquote>
Magazine: <a href="https://cointelegraph.com/magazine/vaneck-files-for-solana-etf-ether-supply-inflates-hodlers-digest-june-23-29/">VanEck files for Solana ETF, Ether supply inflates, and more: Hodler’s Digest, June 23-29</a>

SEC vs. Binance: Court rules BNB sales, cryptocurrencies not securities

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Cointelegraph

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