SEC's Terraform Win: Anticipated Impact on Coinbase and Binance Cases

• SEC Lawsuits Against Crypto Exchanges Continues Amid Successes and Setbacks
• Legal Battle with Terraform Labs
• Judge's Decision May Influence Future Rulings
• Impact on Other Lawsuits
• Continued Disputes and Future Trials

SEC Lawsuits Against Crypto Exchanges Continues Amid Successes and Setbacks

In an ongoing legal battle with cryptocurrency exchanges, the U.S. Securities and Exchange Commission (SEC) has been making a case for their right to regulate exchanges such as Coinbase and Binance for allegedly trading unregistered securities. The SEC's recent victory against Terraform Labs has been put forward as evidence supporting their stance.

Legal Battle with Terraform Labs

The SEC recently marked a win in its contention that Terraform Labs was improperly offering securities via its Terra/Luna stablecoin offerings and the Mirror Protocol. The win was intended to set a precedent in the regulator's current legal disagreements with crypto exchanges Coinbase and Binance.

An SEC lawyer argued in a January 4 filing that the Terraform court decision, which was in the SEC's favor, could be a significant factor in the regulator's ongoing clash with Coinbase. This was echoed in a similar filing the day prior in the SEC's dispute with Binance, asserting that the agency's argument had won in a different court.

Judge's Decision May Influence Future Rulings

Judge Jed Rakoff, who presided over the Terra case, ruled in favor of the SEC, arguing that Terraform and founder Do Kwon were seeking to overturn longstanding Supreme Court law. In his ruling, he stated there was no genuine dispute that the tokens UST, LUNA, and MIR from Terraform are investment contracts within this context.

Impact on Other Lawsuits

While the SEC maintains that the court's decision on the Terraform case should influence the results of the Coinbase and Binance cases, this isn't a universal view. Some, such as TD Cowen analyst Jaret Seiberg, contend that this win doesn't necessarily negate the SEC's previous losses or partial victories. He asserts it's simply a part of the ongoing evolution of the law as more courts assess how securities laws should apply to cryptocurrency products.

He further suggested that rulings at the district court level concerning which crypto assets count as a security will eventually be superseded by federal appeals court and potentially even the Supreme Court. However, this process may take several years.

Continued Disputes and Future Trials

A trial is scheduled for January 29 to resolve remaining disputes in the SEC's case against Terraform Labs and Do Kwon. Despite Judge Rakoff's decision, the company remains steadfastly opposed to the SEC's allegations and plans to continue their defense in court.

Coinbase representatives have yet to comment on the SEC's newest filing in the ongoing legal matter.

Edited by Jonathan Stoker