In the Binance complaint, it calls out Binance’s affiliate in Switzerland for its role in issuing BUSD sold to U.S.
so long as purchasers are within the U.S. The SEC is fully aware of its ability to reach outside of the U.S. or the issuer or asset managers operate within the U.S. nexus, either because purchasers buy within the U.S. dollar.” Thus, the majority of stablecoins have some U.S. It also might exercise its enforcement muscles against foreign actors offering their stablecoins within the U.S.Ī stablecoin report published in December 2022 by the Federal Reserve noted that stablecoins collateralized with assets off-chain, which often must be centrally managed, make up the “lion’s share of the stablecoins market.” That report also noted stablecoins are “typically the U.S. However it decides to go about it, the SEC has more hooks than Howey to take offensive action against managers of stablecoin ecosystems. Instant security, just add retail buyers. And because Binance promised BUSD holders money and created a money-making ecosystem only accessible via BUSD, all buyers of BUSD expected profits from the managerial efforts of Binance and Trust Company A. That money went into a money-generating machine, the “common enterprise,” run by Trust Company A. In the SEC’s allegations, retail buyers invested money in BUSD by buying it from Binance. That framework states a scheme is a security if a purchaser invests money, that money goes into a common enterprise, the purchaser expects profits (either capital appreciation or a revenue share), and the purchasers’ expectation is based on the managerial efforts of others. Howey refers to a Supreme Court case from 1946 that gives a framework for determining if an arrangement or scheme is an “investment contract,” a category of securities set forth in the Securities Act of 1933. Every armchair securities lawyer can see the Howey analysis embedded in the SEC’s alleged facts.
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