Binance, Former CEO Push Back Against SEC’s Amended Lawsuit in Court

• Binance and former CEO CZ Zhao filed a joint motion to dismiss the SEC’s amended lawsuit and its demands for relief.
• The SEC’s revised complaint followed a ruling that excluded certain charges but retained allegations about unregistered securities sales.
• Binance challenges the SEC’s stance, arguing secondary crypto market resales do not constitute securities transactions under current legal interpretation.

In a significant legal development, Binance and its former CEO, Changpeng “CZ” Zhao, have filed a joint motion to dismiss the U.S. Securities and Exchange Commission’s (SEC) amended lawsuit. The motion also seeks to strike parts of the SEC’s requested relief. This filing marks Binance’s continued defense against SEC claims that have been evolving since June 2023.

Binance Disputes SEC’s Broad Interpretation

Binance argues that the SEC’s amended complaint contradicts the court’s ruling, which clarified that crypto assets themselves are not inherently “securities.” However, Binance points out that the SEC continues to argue that nearly all transactions involving crypto assets, including secondary market sales, should be treated as securities transactions. Binance criticized this approach, stating that the SEC’s interpretation hinges on whether some buyers anticipate a rise in value, a view the company considers flawed.

SEC’s Clarifications in Amended Filing

The SEC’s amended complaint, submitted in September 2024, included some revisions. Notably, the regulatory body retracted the term “crypto asset securities,” clarifying in a footnote that it was not referring to the digital assets themselves as securities. It also expressed regret over any confusion this may have caused. Despite these clarifications, Binance and Zhao are seeking to eliminate the SEC’s demands for disgorgement and the proposed injunctive relief targeting Zhao specifically.

This recent motion follows Judge Amy Berman Jackson’s ruling in June 2024, where some of the SEC’s initial allegations were dismissed. The court had notably dropped charges linked to Binance’s Simple Earn program and some secondary BNB sales while allowing other parts of the case to proceed. In response, the SEC has made adjustments in its revised complaint, attempting to reinforce areas left unaddressed in the June ruling.

Broader Context and Implications

The SEC continues to assert that Binance and Zhao engaged in unregistered securities activities. The regulatory agency’s revised approach includes addressing the concerns that led to the partial dismissal, particularly related to BNB sales and the company’s Simple Earn product. The amended lawsuit also focuses on ten specific cryptocurrencies the SEC argues were sold as unregistered securities, an issue that remains central in the ongoing case.