Binance continues its legal struggle with the U.S. Securities and Exchange Commission (SEC) amid allegations of cryptocurrency-related violations.
On Nov. 4, legal representatives for Binance and former CEO Changpeng “CZ” Zhao submitted a motion to dismiss the SEC’s amended complaint, which added tokens like Axie Infinity Shards (AXS), Filecoin (FIL), Cosmos’ ATOM, The Sandbox’s SAND, and Decentraland’s MANA to its claims.
The SEC initially filed an amended complaint in September, claiming these tokens are securities, an assertion Binance’s legal team disputes.
Binance’s defense argues that the SEC’s claims “fail as a matter of law.” In the motion, Binance’s lawyers contend that the court previously acknowledged that crypto assets could be sold under an investment contract, requiring each transaction to independently meet securities laws.
According to Binance’s lawyers, the SEC’s complaint “pays lip service” to this ruling, which stated, “crypto assets are not in and of themselves ‘securities,’” but disregards the logical outcome: that secondary market sales of these assets do not constitute securities transactions.
Instead, the SEC claims that nearly all crypto transactions — including secondary market resales — are securities transactions based on buyers’ potential expectations of asset appreciation.
In its amended complaint, the SEC clarified that it is not addressing Binance’s initial coin offering (ICO) of BNB, where purchasers were aware they were buying directly from Binance Holdings.
Rather, the SEC alleges that Binance Holdings sold BNB in “blind transactions” on its platforms, where buyers didn’t know they were purchasing tokens from BHL. In crypto, “blind transactions” refer to trades where the buyer isn’t informed of the seller’s identity.
This development in the SEC’s case marks another step in an ongoing legal battle since the SEC sued Binance in June 2023. CZ recently completed a four-month U.S. prison term after pleading guilty to violations of Anti-Money Laundering laws.
