SEC Argues Judge Rakoff's Terraform Decision Should Hold Weight in Binance Case

SEC asks court to consider Terraform Labs ruling in Binance case

The United States Securities and Exchange Commission has filed a motion in federal court asking a judge to consider a summary judgment ruling in its case against crypto exchange Binance.

In a Jan. 3 filing in the U.S. District Court for the District of Columbia, the SEC said a Dec. 28 ruling in the commission’s case against Terraform Labs and its co-founder Do Kwon had a “number of issues” similar to its enforcement action against Binance, Binance.US and former CEO Changpeng Zhao.

In the Terra case, Judge Jed Rakoff largely sided with the SEC, ruling that specific tokens involved in the alleged fraud were securities “because they are investment contracts” and “offers and sales of UST constituted an investment contract.”

Lesley O’Neill Appointed as Chief Compliance Officer of Binance US

Binance.US announced the appointment of Lesley O'Neill as its new Chief Compliance Officer (CCO). Lesley will be responsible for leading the company’s compliance programs, including Know Your Customer (KYC), Anti-Money Laundering (AML), and sanctions programs.

Emojis are a compliance problem, for real

“There are 200+ cases a year referencing emojis or emoticons,” according to Eric Goldman, a professor at Santa Clara University School of Law. He’s an IP specialist who tracks court cases involving emojis.

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Emojis can be evidence of corporate malfeasance or worse, even when used inside companies among coworkers.

As the Wall Street Journal reported,

“At FTX Group, expenses and invoices were submitted on Slack and were approved by emoji. These informal, ephemeral messaging systems were used to approve transfers in the tens of millions of dollars, leaving only informal records of such transfers, or no records at all.”

Emojis also bring cross-cultural complications. Eric Goldman, the law prof who writes about emojis, said the thumbs up can be an affirmation of contractual assent. But in some cultures, it’s “offensive (it has the same meaning as the middle finger).”

Put the Bitcoins in the Box

To the point that if you have read a story about crypto so far in 2024, it is overwhelmingly likely to be about the following topic: “People want to be able to put Bitcoins into a box and then sell shares of the box to regular investors in the regular financial system using their regular brokerage accounts.” The big innovation in crypto in early 2024, the thing that has driven up prices, is anticipation that the US Securities and Exchange Commission will approve a spot Bitcoin exchange-traded fund this month. Then ETF providers — including traditional financial firms like BlackRock and Fidelity — will be able to hold Bitcoins in a pot, and institutional and retail investors will be able to buy and sell shares of that pot to get exposure to Bitcoin’s price without actually owning Bitcoin. This, it is thought, will increase the price of Bitcoin.

If your interest in crypto is “number go up,” this is good. If your interest in crypto is “this is the financial system of the future and will increasingly be adopted by big institutions and ordinary people,” this is a mixed bag: On the one hand, there is a lot of optimism about ETF approval driving retail and institutional adoption; on the other hand, “everyone owns Bitcoin through a BlackRock ETF in their Fidelity brokerage account” is not quite proof that crypto is the financial system of the future.