Binance Moves to Dismiss SEC Securities Amendment
Binance's lawyers argue that the SEC has refused to "set standards" for how to determine which crypto assets are considered securities, asking for the amendment to be dismissed.
As reported, the US Securities and Exchange Commission (SEC) filed a motion in mid-September asking for permission to amend certain information related to the securities allegations imposed on the tokens mentioned in the Binance lawsuit. In particular, the SEC wants to change the term "securities" from directly referring to crypto tokens, now they expand this category to all purchase contracts, transactions and expectations of investors.
According to newly released documents, lawyers representing Binance and former CEO Changpeng Zhao (CZ) have moved to petition the court to dismiss the above amendment request.
The motion to dismiss the SEC’s amended motion was filed by counsel representing Binance and former CEO Changpeng Zhao (CZ).
Specifically, the counsel argued that the SEC’s amended motion only “facially complies” with the Court’s previous ruling that crypto assets are not securities, but “refuses to accept the logical conclusion of that ruling.”
“Instead, the SEC’s amended motion insists that virtually every transaction involving crypto assets—including the resale of tokens on the secondary market—is a securities transaction because some buyers may hope that the assets will increase in value.”
The counsel also criticized the SEC for its lack of clarity in announcing regulations related to virtual assets.
"The SEC has refused to provide any standard by which courts, litigators, or market participants can know 'what types of crypto asset transactions qualify as investment contracts' and 'what types of transactions do not qualify. The SEC is simply picking and choosing the right and wrong people arbitrarily.
They recently announced that they were dropping securities charges against transactions involving Ethereum (ETH) without any clear explanation for the action."
The SEC sued CZ along with three companies, BAM Management U.S. Holdings, BAM Trading Services, and Binance Holdings, in June 2023.
In November 2023, Binance admitted to engaging in anti-money laundering, unlicensed money transmission, and sanctions violations. Binance was ordered to pay a $4.3 billion fine with the condition of "deposing" CEO Changpeng Zhao, and CZ must serve a four-month prison sentence.
The SEC has been using the securities argument to hold accountable many large companies in the industry, including exchanges Coinbase, Binance, Kraken, Robinhood, Uniswap, Immutable's IMX token, infrastructure developer Consensys, NFT platform OpenSea, pressure to block the Solana ETF, force eToro and Terraform Labs to pay fines, etc.
On the other hand, the SEC has also received some failures such as having to end the securities investigation targeting Ethereum and "turn around" to quickly approve an Ethereum ETF, as well as ending the investigation into Paxos/BUSD and Stacks without taking any further legal action.
