Binance and its creator, Changpeng Zhao, have submitted a request to dismiss the amended accusation by the U. S. Securities and Exchange Commission (SEC).
In a November. . . In a court submission, Binance and Zhao’s legal representatives contended that the SEC has only marginally recognized a previous court decision that specified that cryptocurrency is not inherently categorized as a security. They asserted that the SEC’s broader legal action conflicts with a prior court ruling that differentiated cryptocurrency from securities. The discussion brought to light the SEC’s stance fails to consider the logical consequences of that decision, indicating that the resale of digital assets on the secondary market does not constitute securities transactions following the initial distribution of the assets by their developers.
The defendants also contended that the revised complaint lacks a solid legal basis for distinguishing between assets involved in investment contracts and the investment contracts themselves.
The submission indicated:
“Assets – whether oranges, beanie babies, or crypto assets – do not remain investment contracts indefinitely just because they were initially offered and sold to customers as part of a bundle of promises and expectations that collectively meet the criteria for ‘investment contracts’ under the Howey test. “
Binance further elaborated that token sales on exchanges are typically impersonal. When one party initiates a purchase order and another initiates a sell order, the transaction is finalized through matching software without direct interaction. In such instances, purchasers do not possess a rational anticipation that their capital is being utilized in a collaborative initiative intended to produce earnings. Lacking this anticipation, the transaction does not satisfy the conditions of an investment agreement according to securities legislation.
Consequently, Binance is aiming to have the amended lawsuit dismissed and is requesting the exclusion of certain sections of the SEC’s sought-after remedies.