SEC Claims Secondary Trading of BNB and These 10 Tokens Qualifies as Securities Under Howey Test
Tokens named as securities include Solana (SOL), Cardano (ADA), Polygon (MATIC), and Axie Infinity (AXS), among others.
The U.S. Securities and Exchange Commission (SEC) has pushed back against efforts to dismiss its lawsuit against cryptocurrency exchange Binance, its U.S. branch Binance.US, and former CEO Changpeng Zhao.
The regulator accuses them of running an unregistered securities exchange through the trading of BNB, Binance’s native token, and ten other cryptocurrencies.
Details From the Filing
The case relies on the Howey Test, a legal standard used to determine if something qualifies as a security. In simple terms, the test examines whether there was an investment of money, a common enterprise, and an expectation of profit derived from the efforts of others.
The SEC claims the Binance case satisfies all three criteria. It says the exchange made users believe the value of their tokens depended on the success of Binance’s ecosystem, creating an expectation of profits.
Its filing goes further by challenging Binance’s position that secondary market trades fall outside the scope of securities laws, asserting that such transactions are also governed by the Howey Test.
