ComplaintMarket News
Binanceās legal team filed a motion to dismiss the SECās amended complaint.
Previous court rulings support that crypto assets are not inherently securities.
Binance and its former CEO, Changpeng āCZā Zhao, have filed a motion to dismiss the SECās amended complaint against them. The motion, submitted on Nov. 4, accuses the SEC of failing to provide clear regulatory standards for the crypto industry. Binanceās legal team contends that the SECās approach contradicts a prior court ruling that found crypto assets are not inherently securities.
The motion pointed out that the SECās latest filing disregards this precedent. It stated that the SEC insists secondary market resales of crypto tokens are securities transactions, simply because some buyers might expect value appreciation. This, Binanceās lawyers argued, demonstrates the SECās unwillingness to establish coherent legal guidelines for determining which crypto transactions qualify as investment contracts.
The lawyers emphasized that the SECās amended complaint continues to classify almost all crypto transactions as securities. They noted the SECās inconsistency, citing its sudden decision to drop claims that transactions involving Ethereum constitute investment contracts. The legal team accused the regulator of arbitrarily choosing winners and losers in the crypto space, which they claim undermines market confidence.
š§Ongoing Legal Challenges for Binance
In June 2023, the SEC launched a lawsuit against Binance, Binance.US, and CZ. The charges included operating unregistered exchanges, broker-dealers, and clearing agencies. While the SEC won a partial victory, Judge Amy Berman Jackson ruled against the agency on significant points. The judge dismissed allegations that Binanceās BNB secondary market sales and BUSD-related programs were investment contracts. The latest amended complaint aims to revive some of those dismissed claims.
Binanceās lawyers criticized the SECās unwillingness to clarify what constitutes an investment contract to courts, litigants, and market participants. They argue that the SECās inconsistent stance causes uncertainty and hampers fair regulatory practices.
The crypto exchange has faced numerous legal issues, including a separate case with the Department of Justice (DOJ). In November 2023, Binance admitted to anti-money laundering violations and was fined $4.3 billion. CZ served four months in U.S. prison but has since been released. Despite these challenges, Binance has made efforts to navigate regulatory hurdles, especially under new CEO Richard Teng, who took over leadership after CZās guilty.
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