J.W. Verret, an associate professor of law at George Mason University, stated that a federal judge's dismissal of several U.S. Securities and Exchange Commission (SEC) claims against Binance is a positive development for the cryptocurrency industry. Verret shared his statement during an interview with Federal Newswire on July 2.
"It's a big win for crypto," said Verret. "It continues along the lines of similar reasoning to the Ripple case. I would have preferred a total win, but I'll take a partial win. It underscores the illegitimacy of the SEC's positions - essentially claiming that everything is an investment contract, and it underscores the need for SEC rulemaking on crypto, which we've been asking for for a while."
Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia issued an opinion dismissing several of the SEC's claims in an ongoing lawsuit against Binance, including the claim that crypto tokens are investment contracts, according to a July 2 post on Binance's website. The judge also dismissed the SEC's claim that Binance's stablecoin BUSD is an investment contract and the claim that secondary sales of the token BNB were securities transactions. The court allowed several of the SEC's claims to proceed. "This decision is a positive step towards safeguarding the integrity of the crypto market and calls for fair and consistent regulation so as not to stifle growth and innovation," Binance said in the post.
George Mason University Associate Professor of Law J.W. Verret (left) and SEC Chair Gary Gensler (right)
| law.gmu.edu; YouTube/GOPFinancialServices
The SEC filed a lawsuit against Binance in June 2023, alleging that the crypto exchange is operating as an unregistered securities exchange and clearing agency, according to a press release from the SEC.
Binance stated in a motion to dismiss the SEC's lawsuit that as recently as 2021, SEC Chair Gary Gensler had publicly acknowledged that no "regulatory framework" existed that would give the SEC authority over crypto exchanges and that "only Congress" could give the SEC that authority, according to a copy of the motion. While members of Congress have considered more than a dozen legislative proposals for a regulatory framework for the industry in recent years, none of those proposals would give the SEC sole regulatory authority over it. Binance said in its motion that the SEC is asking the Court to make major policy decisions that "only Congress can make."
The blockchain-based payment network Ripple faced a three-year legal battle after the SEC accused it of conducting an unregistered securities offering through its token XRP in 2020, according to Investopedia. In July 2023, the U.S. Southern District Court of New York determined that XRP was a security when sold to institutional investors but not when sold on an exchange to members of the general public.
Verret teaches Banking, Securities and Corporation Law at George Mason University's Antonin Scalia Law School, according to its website. He has previously served on the Investor Advisory Committee of the SEC and as Independent Chairman of Egan-Jones Ratings' Board of Directors. He has also served as Senior Counsel and Chief Economist for the U.S. House Financial Services Committee.
