- Binance seeks to dismiss the SEC’s amended complaint that targets AXS, FIL, ATOM, SAND, MANA and BNB.
- The SEC alleges these tokens are securities, which Binance disputes as flawed.
- The legal battle could set crucial precedents for the regulation of cryptocurrencies.
Binance, the world’s largest cryptocurrency exchange, and its former CEO, Changpeng Zhao, have filed a motion to dismiss an amended complaint from the US Securities and Exchange Commission (SEC).
This legal motion, submitted on November 4, aims to counter allegations surrounding the classification of certain cryptocurrencies as securities, particularly focusing on the secondary market resale of these digital assets.
The SEC’s amended complaint
The SEC’s amended complaint, filed in September, targets additional tokens, including Axie Infinity Shards (AXS), Filecoin (FIL), Cosmos’ ATOM, The Sandbox’s SAND, and Decentraland’s MANA.
The regulatory body has alleged that these tokens fall under securities laws, a claim that Binance vehemently disputes.
However, in the amended complaint, the SEC clarified that its claims do not pertain to Binance’s initial coin offering (ICO) of its BNB token, where buyers were aware they were purchasing directly from Binance Holdings.
Instead, the SEC alleges that BNB was sold in “blind transactions,” where buyers lacked full knowledge of the asset’s source, a scenario described as common in the crypto industry due to the complexities of smart contracts and crypto wallets.
Binance argue SEC assertions are wrong
In their motion, Binance’s legal team argues that the court previously ruled against the SEC’s attempt to equate crypto assets with investment contracts, establishing that each transaction involving these assets must be assessed on an individual basis to determine compliance with securities regulations.
Binance’s lawyers assert that the SEC’s arguments are flawed, claiming the agency’s position amounts to a “failure as a matter of law.” They contend that the SEC is attempting to misinterpret the court’s ruling, which acknowledged that crypto assets themselves are not inherently securities.
Instead, Binance argues that secondary market transactions—those occurring long after the initial distribution by developers—should not be classified as securities transactions.
The SEC’s broad assertion that nearly all crypto asset transactions involve securities is described by Binance’s defence as overly simplistic and not aligned with legal precedent.
The ongoing legal battle between Binance and the SEC represents a critical moment in a year-long dispute that began with the SEC’s lawsuit in June 2023.
The outcome could have significant implications not only for Binance but for the broader cryptocurrency market as regulators continue to scrutinize digital asset transactions and their classifications under US law.
