This BUSD lawsuit is reeeal slimy, here's why...
We've referenced this before, but it applies here, so we're going to run it again:
Remember that scene () in the seminal 1999 box office hit, Big Daddy?
The one where Adam Sandler and his semi-adopted son are playing cards, and no matter what hand the kid has - he changes the rules so he can win?
It has a loooot of parallels with this SEC vs. Paxos lawsuit.
If you missed yesterdays edition:
The SEC has told Paxos (issuer of Binance's 'BUSD' stablecoin) that it plans to sue them for selling the BUSD token as an unregistered security.
Ok, but what makes a 'security'? A security is any:
"Investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others."
(Think: company stocks).
But here's the rub:
Stablecoins are specifically designed not to make a profit (or loss)...they're stable.
(It's literally in the name!)
Crypto analyst Miles Deutscher highlighted this point, asking:
"How on earth is a stablecoin considered a security...
No one has ever had ‘the expectation of profit’ when buying BUSD."
The scary part, according to Miles?
"The SEC basically has free reign to define an investable asset as a security if it wishes to.”
(Is that Big Daddy reference hitting home yet?)
The big question is:
If this goes to court, will the SEC be able to successfully argue against the laws they're tasked with enforcing?
Let's hope not. Otherwise, CZ (Binance's CEO) predicts:
"It will have profound impacts on how the crypto industry will develop (or not develop) in the jurisdictions where it is ruled as such."
We tend to agree with him.
