Binance Uses Mango Markets Case to Strengthen Defense Against SEC Charges

Binance uses a legal strategy from a different case to defend itself against the U.S. Securities and Exchange Commission (SEC). On April 26, the cryptocurrency exchange referenced a government filing regarding the conviction of Mango Market's exploiter, Avraham Eisenberg, hoping it could help its defense. During the Eisenberg trial, the government stated that the stablecoin USDC is not a security, as argued by attorney Damian Williams. He noted that USDC holders do not expect profits, given its stable value tied to the U.S. dollar.

This point helped categorize related financial products in the Eisenberg case and could support Binance's dismissal of certain SEC claims. However, this argument’s usefulness might be limited as the SEC's charges against Binance involve various offerings, which differ significantly from the USDC issue. Additionally, this argument pertains only to Binance’s civil case and not any criminal charges against former CEO Changpeng Zhao, who is awaiting sentencing.

This legal perspective might also benefit cryptocurrency platforms like Coinbase, which are facing similar SEC charges. The SEC sued Coinbase and Binance in June 2023, and the regulatory body also targeted other exchanges like Kraken later that year. Using legal precedents from unrelated cases highlights the intricate legal landscape and ongoing challenges cryptocurrency exchanges face with regulators. The outcomes may set significant precedents for defining securities in the cryptocurrency industry.