The SEC argued that if BNB were originally sold as investment contracts, then any subsequent sale of them should also be considered a sale of securities. However, Judge Amy Berman Jackson said that this statement is untrue because it does not take into account the specific details and context of each transaction made on the secondary market. Even if BNB coins were initially sold as investment contracts, they do not necessarily remain as such throughout their existence.
The court cited Judge Analisa Torres' 2023 decision in SEC v. Ripple. Torres ruled that if XRP coins are traded on the secondary market, they should not be classified as securities. Judge Jackson also highlighted the inconsistency of the SEC's position, noting that the agency should have provided more evidence to support its expectation of profits from secondary sales of BNB under the Howey test. This test is used to determine whether an asset is a security.
Cryptocurrency law expert James Murphy called this court decision a victory for the entire crypto industry. The court's rejection of the SEC's arguments about secondary sales of BNB could have a positive impact on other cases involving crypto exchanges Kraken and Coinbase (NASDAQ:COIN). They face similar charges of trading in unregistered securities from the SEC.
