SEC v. Binance

The SEC sues Binance and its CEO, Changpeng Zhao, alleging that BNB and BUSD, Binance's stablecoin, qualify as securities, along with various other securities law violations.

There is no requirement that an investment contract involve a contractual arrangement. Tokens, themselves, are not securities, and each distribution thereof must be analyzed under Howey. The judge also rejects the SEC’s “embodiment theory” which posits that tokens themselves embody an investment contract. The Judge also clarifies that because Binance is incorporated offshore and has not yet entered the United States, the 5 year statute of limitations on the sale of BNB has not yetbegun to run. Additionally, the judge delineates that the Simple Earn program is not a security, which may serve as a rubric for lending protocols.

1:23-cv-01599