Binance, and former CEO CZ, has submitted a request to dismiss the U.S. Securities and Exchange Commission’s (SEC) revised set of allegations.
Binance’s legal team, along with its former CEO, argued that crypto asset resales in the secondary market, conducted long after their initial distribution, do not qualify as “securities” transactions.
Amid accusations involving certain crypto assets, Binance continues its fight against the United States securities authority.
Legal representatives for Binance and former CEO Changpeng “CZ” Zhao filed a motion seeking to dismiss the U.S. SEC’s updated complaint.
On Nov. 4, attorneys for Binance and CZ submitted a request asking the court to dismiss the SEC’s latest complaint update, which now lists tokens such as Axie Infinity Shards.
The SEC’s amended complaint filed in September targets additional tokens such as Filecoin, Cosmos’ ATOM, The Sandbox’s SAND, and Decentraland’s MANA.
In their latest filing, Binance’s lawyers maintain that the court appropriately declined the SEC’s first attempt to classify crypto assets as investment contracts.
The court’s ruling indicated that sellers may sell crypto assets within investment contracts, asserting that compliance with securities laws must be met for each individual transaction.
According to the lawyers, the SEC’s amended complaint “pays lip service” to the court’s determination that “crypto assets are not inherently ‘securities,’” but it does not accept the logical inference of that conclusion.
“Secondary market resales of the assets long after they were first distributed by their developers are not ‘securities’ transactions.”
The lawyers stated that the SEC argued that virtually all transactions related to crypto assets — including blind secondary market sales of tokens — qualify as securities transactions based on the notion that some buyers might expect an appreciation in value.
Binance’s defense asserts that the SEC’s amended accusations “fail as a matter of law” and should be dismissed with prejudice, leaving no room for amendments.
The SEC’s amended complaint does not address the initial coin offering of the BNB token, as buyers reportedly knew they were buying BNB from Binance Holdings.
Rather than a clear transaction, the SEC alleged that Binance Holdings sold BNB in blind sales on the Binance and Binance.US exchanges, with buyers unaware they were obtaining tokens from BHL.
The term “blind transactions” in the crypto industry describes asset transfers that do not reveal complete information about their contents.
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Coinbase explains that the complexity of smart contracts and the restrictions of crypto wallets in presenting these details contribute to the widespread use of blind signing in the industry.
The SEC’s accusations extended to XRP sales made by Ripple executives. Nonetheless, in a July 2023 ruling, U.S. District Judge Analisa Torres stated that certain sales of digital tokens by Ripple did not constitute legal violations as the SEC claimed.
The judge classified those transactions as “blind bid or ask transactions,” where buyers “could not have known if their payments of the money went to Ripple or any other seller of XRP.”
The latest updates in the SEC’s case against Binance signify another important chapter in the legal battle that has been ongoing for more than a year since the SEC initially sued Binance in June 2023.
After pleading guilty to charges involving breaches of U.S. Anti-Money Laundering laws, Binance’s founder, CZ, served a four-month sentence in a federal prison, which he completed in late September.
