Binance's BUSD stablecoin has been classified by the SEC as an unregistered security, leading to confusion and questions about the classification of other stablecoins. The SEC alleges that BUSD was marketed as an investment contract, with Binance offering various interest-earning or profit-generating schemes that required the purchase of BUSD.
The SEC claims that BUSD purchasers invested in a common enterprise with Binance and that Binance marketed BUSD's profit-earning potential. The SEC's lawsuit explains how both BNB and BUSD could be considered securities, with BUSD investors expecting profits from interest-like payments made by Binance. Binance's promise to maintain the value of BUSD may have satisfied the Howey Test.
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