Binance could strengthen its defense against the U.S. Securities and Exchange Commission (SEC) based on an unrelated case.
On April 26Binance and related parties filed a government document regarding an unrelated case against Mango Markets exploiter Abraham Eisenberg, who was convicted by a jury on April 18.
The government's argument
Binance's defense team drew attention to a specific paragraph in which the US government expressed its position on whether a particular stablecoin, USDC, is a security.
On behalf of the U.S. government, attorney Damian Williams said that “there is no factual basis for treating USDC as a security,” adding that “USDC holders do not expect profits from token” due to its ties to the US dollar.
The argument shut down a possible exception that would prevent MGNO Perpetuals, which are based on the value of USDC, from being classified as a mixed swap.
That argument helped government prosecutors in the Eisenberg case, but could benefit defendants facing securities violations in other cases, like Binance.
Limits of argument
The relevance of the case may have limits. The SEC has accused Binance of various securities violations, but each case focuses on different offerings.
Additionally, the latest filing only concerns the SEC's civil securities suit against Binance Holdings Limited, its former CEO. Zhao Changpeng, and related companies. This is not a criminal case in which Zhao has pleaded guilty and is awaiting sentencing.
The Eisenberg case could also help the accused in other securities-related cases, including Coinbase, for similar reasons. The SEC filed lawsuits against Coinbase and Binance within days of each other in June 2023, and it has filed various other lawsuits against other exchanges, including Kraken in November 2023.