Changpeng Zhao, Binance Lawyers Renew Efforts To Toss Out SEC Lawsuit

Key Takeaways

• Binance takes on the SEC, arguing that the regulator’s allegations are based on flawed assumptions.
• The company claims that the SEC’s uncertainty over what constitutes a security undermines its case.
• A dismissal could have significant implications for the crypto industry’s regulatory environment.

Just weeks after regaining his freedom, former Binance CEO Changpeng Zhao is wasting no time in taking on the Securities and Exchange Commission (SEC).

Zhao’s legal team and Binance lawyers recently filed a new motion to dismiss the commission’s lawsuit from court.

Binance Takes Aim at SEC’s “Securities” Stance

In the Nov. 4 filing , Binance’s legal team argued that the SEC’s allegations of securities violations related to crypto transactions do not hold water.

The team claimed that the SEC’s own uncertainty over the definition of crypto tokens as securities undermines its case.

The SEC had initially accused Binance of selling unregistered securities, but in an amended complaint, the agency admitted that its previous definition of “crypto-asset security” was confusing and would no longer be used.

Despite this, Binance argues that the SEC continues to treat crypto assets as securities without clarifying what constitutes an investment contract. 

“This Court correctly rejected the SEC’s initial attempt to conflate crypto assets with investment contracts, recognizing that although crypto assets can be sold as part of an investment contract, each transaction must independently satisfy Howey for the securities laws to apply to that transaction,” Binance’s defense noted.

The Binance legal team also took aim at the SEC’s failure to provide regulatory clarity, accusing the agency of deliberately obscuring the rules of the game.

The legal team blamed the SEC for failing to offer regulatory clarity on crypto. They noted that the SEC has refused to articulate any “standard for courts, litigants, or market participants to know which crypto-asset transactions qualify as investment contracts and which do not.”

Motion to Dismiss Allegations Against CZ

Binance’s defense team also requested that the court dismiss the SEC’s request for disgorgement against Zhao, arguing that after 16 months of investigation, the agency had failed to produce any evidence of wrongdoing.

They also asked the court to lift the ban on Zhao’s participation in the securities market.

In addition, the filing sought to dismiss securities allegations against Binance’s native token, BNB, as well as its employee compensation program and other altcoins traded on the platform.