Changpeng Zhao and Binance contest the SEC’s amended complaint in court

Posted by cryptonews Crypto News November 5, 2024 580 Views

By submitting a move to dismiss the amended complaint and advocating for more clarity in the interpretation of crypto law, Binance and its former CEO Changpeng Zhao challenge the SEC’s regulatory position.

On November 4, Binance and former CEO Changpeng Zhao (CZ) reacted to the SEC’s recent amendments by filing a motion to dismiss the agency’s updated complaint, continuing their regulatory battle with the SEC.

The legal team for Binance contends that the SEC’s approach to cryptocurrency regulation is too general and unclear for uniform implementation.

Binance’s Challenge to SEC’s Interpretation of Securities Laws

The motion disputes the SEC’s interpretation of securities laws as they apply to cryptocurrency transactions.

According to Binance’s filing, the SEC’s approach is inconsistent, especially in treating secondary market resales as securities transactions despite acknowledging that crypto assets themselves are not inherently securities.

The legal team at Binance contends that this strategy ignores the special qualities of cryptocurrency assets.

The motion cites the SEC’s claim that almost all cryptocurrency transactions are securities transactions because buyers may expect value growth.

According to Binance, this perspective goes beyond the intent of securities laws.

The motion’s main argument centers on the SEC’s ambiguous rules, which Binance says deprives market players of criteria for determining whether cryptocurrency transactions are securities.

“The SEC still refuses to articulate any standard for courts, litigants, or market participants to know which crypto-asset transactions qualify as investment contracts,” the filing asserts.

Citing what Binance views as capricious enforcement decisions, the filing further explains that the SEC’s position is at odds with earlier court decisions regarding cryptocurrency assets.

Binance, for instance, pointed out that the regulator had withdrawn its assertion that Ethereum transactions are investment contracts.

Given the SEC’s recent actions against a number of cryptocurrency companies, this discrepancy calls into question the agency’s regulatory enforcement.

The SEC first filed a lawsuit against Zhao and related businesses, such as BAM Management U.S. Holdings and BAM Trading Services, in June 2023. The agency’s amended complaint is a part of that larger case.

Binance.US (BAM Trading Services Inc.) has also attempted to have the charges against it dropped in a different filing.

This SEC action comes after the Commodity Futures Trading Commission (CFTC) filed a similar lawsuit over Binance’s U.S. operations.

The criminal charges filed by the Department of Justice (DOJ), which ended in November 2023 with Binance facing significant fines and Zhao receiving a prison sentence, are notable in contrast to the current SEC complaint.

This motion’s timing is consistent with the SEC’s continuous efforts to enforce stricter regulations on the cryptocurrency industry.

The court’s final ruling could influence how securities laws are interpreted in cryptocurrency transactions going forward and possibly establish industry-wide regulatory precedents.

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