J.W. Verret, a law professor at George Mason University, stated that the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have both reached "extraterritorially" by prosecuting the cryptocurrency exchange Binance. Verret shared his statement with Federal Newswire on July 2 after a federal judge dismissed several of the SEC's claims against Binance.
"Unfortunately, another thing we're doing in the United States is the DOJ and the SEC are reaching extraterritorially - reaching out into other countries, disrespecting the sovereignty of those countries with actions that go after founders who were founding crypto projects outside of the United States," said Verret. "I think the Binance case is an overreach by both the SEC and the CFTC."
According to CoinDesk, the SEC and CFTC separately sued Binance last year. Binance settled the CFTC's lawsuit in November as part of a resolution with multiple U.S. government agencies, but the SEC did not participate in the settlement.
Earlier this month, Judge Amy Berman Jackson dismissed several of the SEC's claims against Binance, including the claim that crypto tokens are investment contracts, according to a post on Binance's website. Judge Jackson also dismissed the SEC's claim that Binance's fiat-backed 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.
Investor Choice Advocates Network (ICAN), a nonprofit public interest litigation organization, filed an amicus brief in September in support of Binance's motion to dismiss the SEC's lawsuit, Legal Newsline reported. ICAN said the SEC is potentially hindering technological progress that has enabled investors to participate in digital asset markets by attempting to extend its authority over transactions that have taken place outside of the U.S. ICAN pushed back against the SEC's assertion that although Binance.com is a foreign platform, American investors who have left the U.S. and participate in foreign markets should still be governed by U.S. federal securities laws, saying instead that the SEC's approach is harming investors and could shut them out of foreign markets. ICAN said that any SEC allegations concerning certain transactions need to be accompanied by evidence that those transactions took place in the U.S.
Verret teaches Banking, Securities and Corporation Law at George Mason University's Antonin Scalia Law School, according to the university's website. He has previously served on the Investor Advisory Committee of the SEC and as Independent Chairman of the Board of Directors of domestic credit rating firm Egan-Jones Ratings. He has also served as Senior Counsel and Chief Economist for the U.S. House Financial Services Committee.
