Binance and CZ’s lawyers file motion to dismiss SEC’s lawsuit

Lawyers representing Binance and former CEO Changpeng “CZ” Zhao have filed a motion to dismiss the amended complaint filed by the SEC last month in the ongoing legal battle.

Lawyers representing Binance (BNB) and CZ argue in their filing on Nov. 4 that the Securities and Exchange Commission’s amended complaint pays “lip service” to the court’s previous decision not to recognize crypto assets as securities. Despite this, they believe that the SEC refuses to acknowledge the impact of the decision on the trading of digital assets.

Complying with the court’s decision that cryptocurrencies do not fall within the scope of securities would mean that reselling assets in the secondary market would not count as “securities” transactions.

“The SEC’s Amended Complaint continues to insist that virtually all transactions involving crypto assets (including blind secondary market resales of tokens) are securities transactions because some buyers may expect the assets to increase in value,” the attorneys wrote.

The filing also points out that the SEC’s amended complaint still lacks the legal basis to distinguish between assets and investment contracts, arguing that assets do not count as investment contracts simply because they are “offered as part of a package of promises and expectations” to customers. .”

It is also stated that the SEC still does not implement clear standards for courts, plaintiffs or market participants to determine which digital asset transactions fall into the investment contract category and which do not.

They argue that the SEC tends to pick “winners and losers arbitrarily,” citing a recently abandoned case involving Ether transactions that were considered investment contracts.

“The agency even acknowledges that nontest securities are indistinguishable from Beanie Babies at the pleading stage,” the attorneys wrote.

The remainder of the document details the arguments against the lawsuits the SEC has brought regarding Binance and CZ. The document ends with a request to dismiss the SEC’s allegations against Binance and Changpeng Zhao without leaving any room for correction.

Last September, the SEC filed an amended complaint against Binance and CZ, stating that it never intended to assign the securities label to cryptocurrencies and tokens. The agency explained that it uses securities as shorthand to refer to various aspects of crypto sales.

Eventually, the SEC promised to use the term “cryptoasset securities” and apologized for the confusion it caused.

On June 5, 2023, the SEC filed a lawsuit against Binance, CZ, and several affiliated companies for violating securities trading regulations. The agency attributes the breach to a court document stating that the SEC recognizes the BNB token and BUSD stablecoin as securities.

Binance isn’t the only crypto-related entity to have legal issues with the SEC due to being considered a security. The SEC also has lawsuits against Coinbase and Ripple based on allegations that these businesses offered unregistered crypto asset securities.