Binance and CZ filed to dismiss the SEC lawsuit, accusing the SEC of inconsistent regulation and a lack of clarity on crypto asset guidelines.
Lawyers representing Binance and its former CEO Changpeng “CZ” Zhao have made another attempt to dismiss the lawsuit filed by the U.S. Securities and Exchange Commission (SEC). On Monday, they submitted a motion to dismiss an amended complaint filed by the SEC last month.
The defense team in the filing points out that the SEC’s amended complaint fails to appropriately address a prior court decision. This has pointed out that tokens or coins, which are crypto assets, are not automatically classified as securities. However, the lawyers claim the SEC refuses to accept the logical conclusion of that ruling—that secondary market resales of crypto assets, long after their initial distribution, should not be categorized as “securities” transactions.
The filing accuses the SEC of a lack of adequate clarity in handling virtual assets. It notes that the SEC still categorizes most crypto asset transactions as securities transactions, even if those transactions are merely secondary resales. As the defense states, buyers tend to expect the value of the assets to rise, a condition that the defense should not qualify as securities.
SEC Lawsuit Against Binance Faces New Legal Push for Dismissal
The legal team also accuses the SEC of being an inconsistent regulator and, therefore, acting up. The filing also points to the absence of guidelines that define circumstances when transactions involving crypto-assets constitute the offering of investment contracts. It also raises questions about the SEC’s change of heart and drops the argument that every transaction involving Ether, the second largest cryptocurrency after Bitcoin, is an investment contract.
In June 2023, the SEC filed a lawsuit against Zhao, Binance, and its related companies, including BAM Trading Services. This case differs from the legal cases that the U.S. Department of Justice filed against Binance and Zhao.
In November 2023, Binance disclosed breaches of anti-money laundering, unauthorized money transmission, and sanctions. Thus, Binance was fined 4.3 billion, and Zhao was in a US prison for four months before his release. The SEC’s actions against Binance are part of the agency’s overall clampdown on the crypto market. Just last week, the regulator issued a Wells notice to Immutable, a gaming company in the crypto space.
The outcome of this latest legal battle could have significant implications for the broader cryptocurrency market and its regulatory future.
