Attorneys representing Terraform Labs and Do Kwon referenced Binance during a hearing before the US Congress. Hinman communications and a US complaint were used to have the SEC lawsuit dismissed.
The SEC’s legal team argues that further papers provided by Dentons do not provide sufficient evidence to dismiss the lawsuit against Terraform Labs and Do Kwon. They assert that the Howey test identifies TerraUSD (UST) as a security and that the transcript from Binance.US and the emails from the SEC are irrelevant to the current dispute.
During a court hearing on June 15th, Dentons provided further documentation in support of its move to dismiss the SEC action. They contend that UST is an algorithmic stablecoin with real-world applications rather than a security. A House Financial Services Committee hearing, the SEC’s injunction against Binance.US, and the Hinman emails related to the Ripple litigation are among the documents that were submitted.
Defense attorneys emphasized a “regulatory gap” in the classification of crypto assets and contended that the SEC’s reliance on internal emails goes beyond the bounds of securities regulations. They cited continuing debates in Congress over stablecoin issuance and legal frameworks for digital assets.
A ruling on the motion to dismiss will be made public by Judge Jed Rakoff, who is presiding over the case, by July 14th. Kwon was previously represented by Dentons in a Singapore High Court class-action lawsuit and in contesting the SEC’s subpoena in the Mirror Protocol probe.
This decision clarifies the continuing legal controversy around stablecoin regulation and the designation of digital assets as securities. The conclusion of this legal proceeding could have a big impact on how cryptocurrencies are regulated in the US.
The SEC’s arguments against the case’s dismissal show the regulatory body’s ongoing investigation into the cryptocurrency market and efforts to enforce securities regulations. Market participants are looking for regulatory clarity on the definition of digital assets, notably stablecoins, as securities.
The defense’s submission of supplemental papers tries to provide the case a wider background and emphasize the difficulties associated with classifying digital assets. Dentons attempts to contest the SEC’s application of securities laws by citing legislative hearings and prior court cases.
Judge Jed Rakoff’s ruling on the request to dismiss will be highly anticipated because it will establish a standard for how future lawsuits involving digital assets will be handled. The result might have an impact on the regulatory environment and SEC enforcement proceedings in the cryptocurrency market.
Overall, the lawsuit represents a substantial legal conflict between the SEC and Terraform Labs, and its resolution may have an impact on how regulations for digital assets are implemented. It highlights the continuous difficulties regulators and market participants face in understanding the rapidly changing crypto ecosystem and choosing the best regulatory framework.