Binance's opening win

The SEC failed to provide satisfactory answers during the hearing on the morning of June 14 and the judge denied the request to freeze Binance.US assets.

On June 12, the US Securities and Exchange Commission (SEC) filed a federal court application to freeze the assets of Binance and Binance.US. However, in the hearing that took place from 2 a.m. on June 14 (Hanoi time), judge Amy Berman Jackson rejected the SEC's request, meaning that Binance.US can still operate in the US.

Bloomberg quoted the judge as saying: “Closing all of Binance.US will have significant consequences, not only for the exchange but also for the digital asset market as a whole.”

Earlier on June 5, the SEC sued Binance, Binance.US and billionaire CZ with 13 allegations that Binance inflated trading volumes, directed customer funds, did not restrict Americans from the platform, and deceive investors about their market control measures. The regulator also accused CZ of having access to the assets of Binance.US users.

Illustrating the historic hearing between Biannce and the SEC on June 14. Photo: Cointelegraph

The SEC failed to answer the core question

Coindesk said the judge criticized the SEC's attorney for rushing to prove that CZ or anyone else had access to users' private keys. He also delves into the core question of the lawsuit: "What makes crypto assets a security? If not a security, is it a commodity?"

The judge asked the SEC to distinguish between "crypto assets" and "crypto asset securities," but was not satisfied with the answer received. Matthew Scarlato, an attorney for the SEC, said the regulator provided several examples of cryptocurrencies it believes are securities in the complaint.

The judge asked both the SEC and Binance whether cryptocurrencies can be considered commodities? This is the unanswered question of the cryptocurrency industry for many years. If it were a commodity, it would be under the supervision of the US Commodity Futures Trading and Futures Commission (CFTC). Matthew Martens, an attorney representing Binance.US, said BNB, the cryptocurrency issued by Binance , is a "crypto asset".

Both sides compromise

Contrary to the tense statements before the hearing, both the SEC and Binance showed a willingness to compromise during the trial. Jennifer Farer, SEC attorney, says she's ready for Binance.US to continue in business. And the Binance representative confirmed that they want to operate normally and "do not let go of the tie".

At the end of the debate, Judge Jackson said that the two sides could find a voice in the new agreement. This will give the parties the necessary time to sort out the details of the case.

Judge Jackson ordered the SEC and Binance to continue negotiations. In return, Binance.US needs to transfer all assets to a new wallet address and CEO Changpeng Zhao (CZ) has no right to touch any of the exchange's assets. The judge noted that if the two sides come to a mutual agreement, "there is absolutely no need to issue an injunction". The SEC and Binance need to report the details of the settlement to the court by June 15.

Community response

On the same day of the hearing, documents related to Bill Hinman, the former chief financial officer of the SEC, released in 2018 were also released for the first time. According to attorney John Deaton, founder of CryptoLaw, this document is especially important in assisting exchanges that are being sued by the SEC. The SEC argues that most cryptocurrencies are securities, so they are regulated by the SEC.

Cointelegraph quoted Deaton as saying that the documents not only influenced public opinion but also reshaped debates about the law, "prompting congress to intervene and make the judgment that the SEC is wrong in its management of assets." digital".

Meanwhile, the crypto community also expressed displeasure with SEC Chairman Gary Gensler's statement about cryptocurrencies. Prior to becoming the head of the SEC, Gensler was one of the pioneering professors who taught about blockchain. But now, he is leading the “crackdown on crypto companies.”

One video that is going viral on Twitter is in 2018, when Gensler spoke during an event hosted by Bloomberg about the cryptocurrency market . At the time, he asserted that 70% of assets in the cryptocurrency market are not securities.

Another video recorded his lecture at the Massachusetts Institute of Technology (MIT) in the fall of 2018 with the theme "Blockchain and currency", asserting: "The Initial Public Offering (ICO) is not infringing. US securities laws. ICOs are controversial but not a legal issue." At the time, he also suggested that three-quarters of the cryptocurrency market is not securities, but commodities, cash, and cryptocurrencies.

These statements are in stark contrast to Gary Gensler's recent statement as SEC Chairman, that most cryptocurrencies are securities and are subject to SEC regulation.

“The inconsistent statements show Gensler hypocrisy,” ZK Shark, one of the most influential figures in the crypto community, wrote on Twitter.

On June 12, US Congressman Warren Davidson even called for the firing of SEC Chairman Gary Gensler through a proposed bill to restructure the committee.