Binance, CZ’s Lawyers File Motion to Dismiss Amended Complaint in SEC Lawsuit

A motion to dismiss an amended complaint was filed on Nov. 4.
It claimed the SEC is refusing to “articulate any standard” when it comes to determining which crypto asset transactions qualify as investment contracts.

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Lawyers representing Binance and former CEO Changpeng “CZ” Zhao have made a fresh attempt to dismiss the Securities and Exchange Commission (SEC) lawsuit against them.

On Monday, they filed a motion to dismiss an amended complaint submitted by the SEC last month.

Their filing argues that the amended complaint pays “lip service” to an earlier court ruling that crypto assets are not in and of themselves securities but “refuses to accept the logical conclusion of that ruling—that secondary market resales of the assets long after they were first distributed by their developers are not ‘securities’ transactions.”

“Instead, the SEC’s Amended Complaint continues to insist that virtually all transactions involving crypto assets—including blind secondary market resales of tokens—are securities transactions because some buyers might hope the assets will increase in value,” it said.

It also slammed the SEC for a lack of clarity on regulation when it comes to virtual assets. “The SEC still refuses to articulate any standard for courts, litigants, or market participants to know which crypto-asset transactions qualify as investment contracts, and which do not,” it stated.

“And the SEC continues to choose winners and losers arbitrarily, recently abandoning with no explanation its claim that transactions involving Ether—the second most common crypto asset, after Bitcoin—are investment contracts.”

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The SEC initiated the lawsuit against Zhao and three companies, BAM Management U.S. Holdings, BAM Trading Services and Binance Holdings in June 2023. The case is separate to the criminal charges brought against Zhao and Binance Holdings by the Department of Justice.

In November 2023, Binance admitted to engaging in anti-money laundering, unlicensed money transmitting and sanctions violations. Binance was fined $4.3 billion and Zhao spent four months in prison in the U.S. He has since been released. The SEC has also brought cases against several other cryptocurrency companies and last week the regulator issued a Wells notice to gaming company Immutable.

Edited by Parikshit Mishra.