SEC Brings Up TerraForm Ruilng in Coinbase and Binance Suit

The U.S. Securities and Exchange Commission (SEC) is bringing up its partial win against Terraform Labs to fortify its positions in ongoing lawsuits against Coinbase and Binance.

The recent ruling in the Terraform Labs case, dated December 28th, declared specific tokens (UST, LUNA, wLUNA, and MIR) as securities. The SEC uses the ruling as a legal reference, submitting it to oppose both Coinbase and Binance in court.

In a parallel lawsuit against Binance, the SEC employs the Terraform Labs judgment to reinforce its case. The agency aims to leverage the Terraform ruling against Binance’s dismissal motions, stressing the court’s analysis of UST to BUSD and other services.

In its filing, the SEC highlights Terraform Labs’ case, stressing parallels between Binance’s offerings and the ruling’s basis

The regulator aims to fortify its claims against the two cryptocurrency exchanges, focusing on features such as Binance’s “so-called stablecoin” BUSD and its staking-as-a-service, BNB vault, and Simple Earns programs.

Regulatory Pressures on Coinbase and Binance

Coinbase had previously come under increased scrutiny from the SEC in 2023 as the regulatory body intensified efforts to enhance oversight in the cryptocurrency industry. Coinbase investors’ concerns flared due to speculation about token reclassification as securities under SEC rules, triggering potential new regulatory obligations.

Responding to regulatory pressures, Binance took proactive measures in October, announcing plans to delist eight Binance USD (BUSD) trading pairs as part of a broader initiative to phase out support for the stablecoin by 2024. Notably, the affected pairs saw isolated margin borrowing suspended by early September.

Complicating matters, Binance issued a Thursday warning about potentially removing privacy coins like Monero, Zcash, and Horizen.

The caution was accompanied by a statement highlighting that these tokens had been flagged with a “monitoring tag,” suggesting a potential lack of adherence to listing requirements related to team dedication, cybersecurity measures, trading activity, and additional standards.

While Binance settled criminal charges with the Department of Justice in November, agreeing to pay a $4.3 billion penalty and appoint a new CEO and an external monitor, the SEC’s lawsuit against Binance for allegedly operating an unregistered securities exchange remains ongoing.

The SEC filed the lawsuit in June, accusing Binance of repeatedly lying to customers and misdirecting funds. Despite multiple motions to dismiss, the case continues.

Currently, neither Coinbase nor Binance have commented on the recent SEC filings.