Binance has asked that the court dismiss the amended complaint of the U.S. Securities and Exchange Commission (SEC) in their ongoing lawsuit regarding its alleged violations of U.S. securities law.
The SEC’s amended complaint, which was filed in September 2024, added tokens such as Axie Infinity (AXS), Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), and Decentraland (MANA) to its original allegations that Binance’s sale of these tokens qualifies as a securities transaction.
However, in a motion filed on November 4, Binance’s legal team argued that the SEC’s claims “fail as a matter of law,” maintaining that secondary market resales of crypto assets are not equivalent to securities transactions. They contend that the SEC’s rationale improperly assumes that most crypto transactions inherently meet securities definitions based on buyers’ profit expectations.
The motion also points out that the SEC has yet to establish clear guidelines for courts, litigants, or market participants regarding which digital asset transactions are classified as investment contracts and which are not.
Binance lawyers requested that the court dismiss the SEC’s claims against Binance and Changpeng Zhao and leave no room for any amendments.
This legal battle between the SEC and Binance began in June 2023, when the regulator filed 13 charges against the crypto exchange and its founder and CEO, Changpeng Zhao. The regulator claimed that they had violated the U.S. Securities laws by operating unregistered exchanges, broker-dealers, and clearing agencies and the unregistered offer and sale of securities. It also accused the exchange’s executives of misrepresenting trading controls and oversight on its U.S.-based platform, “Binance.US”.
Notably, the SEC withdrew its request for a court decision on whether the tokens in the Binance lawsuit should be classified as securities in a filing on July 30, 2024. Instead, it chose to amend its complaint to address “Third Party Crypto Asset Securities.” According to the SEC, the amendment removed the need for a judicial ruling on token classification at that time.
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