Cryptocurrency exchange Binance has taken another step in its legal battle with the United States Securities and Exchange Commission (SEC). The exchange has filed a new request to dismiss the SEC’s updated lawsuit alleging cryptocurrency regulatory violations. In a filing filed on November 4, lawyers for Binance and former CEO Changpeng “CZ” Zhao argued that the SEC’s filing was “legally invalid.”
New developments in Binance and SEC lawsuit
The SEC targeted several popular cryptocurrencies, including Axie Infinity Shards, Filecoin, Cosmos, The Sandbox (SAND), and Decentraland (MANA), in its updated complaint filed in September. The commission claims that these crypto assets should be considered “investment contracts.” However, Binance’s legal defense team is against the SEC’s efforts to associate crypto assets with investment contracts, stating that such claims are “legally invalid.” The lawyers argue that the court has previously ruled that such assets cannot be considered “securities” per se, and that each transaction must be examined legally in its own context.
Recalling that the SEC had previously made similar claims regarding Ripple’s XRP sales, Binance’s defense team says that the court in that case stated that the XRP token sales were not “securities.” At the time, U.S. District Judge Analisa Torres stated that some of Ripple’s XRP sales were insufficient claims that investors expected the assets to appreciate in value.
“Blind transactions” and SEC allegations
At the heart of the SEC’s allegations against Binance is a type of transaction called “blind transactions.” Blind transactions refer to situations where it is not known exactly who is buying or selling an asset. The SEC argues that some of Binance’s BNB sales on the Binance and Binance.US platforms should also be considered blind transactions. According to the allegations, users were making transactions on these platforms without knowing that they were purchasing tokens from Binance Holdings Limited (BHL).
Binance, on the other hand, argues that such transactions are not deceptive to investors and claims that these accusations made by the SEC over blind transactions are invalid. The company’s defense team emphasizes that each crypto asset sale is in compliance with securities laws when evaluated independently. Binance argues that the case should be dropped entirely on the grounds that these allegations have no legal validity.
The SEC filed a lawsuit against Binance in June 2023, claiming that the exchange violated US securities laws. The SEC, which particularly criticized the creation of investor expectations that crypto assets would gain value, cited many examples to support these claims. At this point, Binance and CZ emphasize that the allegations made by the SEC are legally invalid and request that the case be dropped.
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