Lawyers for Binance and its former CEO Changpeng “CZ” Zhao have filed a motion to dismiss the Securities and Exchange Commission’s (SEC) amended lawsuit against them, citing a lack of regulatory clarity regarding digital assets.
Binance and CZ Move to Dismiss Amended SEC Lawsuit, Criticizing Regulatory Uncertainty
The petition filed Monday targets an amended complaint filed by the SEC last month.
The defense argues that the SEC's amended complaint overturns a previous court ruling that found crypto assets are not inherently securities.
Binance’s lawyers argue that “the resale of assets on the secondary market long after they were initially distributed by their developers is not a ‘security’ transaction.”
According to its filings, the SEC claims that all transactions involving digital assets qualify as securities because buyers can expect a future increase in the value of the asset.
Binance’s legal team also criticized the SEC for not setting clear regulatory rules. “The SEC still refuses to articulate any standards by which courts, litigants, or market participants can know which crypto asset transactions qualify as investment contracts,” the filing said.
It was emphasized that the SEC recently dropped the claim that transactions involving Ether were investment contracts without explanation.
The SEC first filed its lawsuit against Zhao and Binance in June 2023. The case is separate from the criminal charges filed by the Department of Justice (DOJ), which resulted in Binance paying $4.3 billion in penalties for money laundering and sanctions violations. Zhao, who served four months in prison, has since been released.
The SEC has taken actions against other crypto firms recently, including a Wells notice issued to blockchain gaming firm Immutable last week.
*This is not investment advice.
