Former Binance CEO Changpeng Zhao has filed a motion to dismiss the Securities and Exchange Commission’s (SEC) amended lawsuit, arguing the regulator fails to clearly define which cryptocurrency transactions qualify as securities.
The motion, submitted on November 4, challenges the SEC’s assertions regarding several tokens, including Axie Infinity Shards (AXS) and Filecoin (FIL). Zhao contends that the SEC’s approach is arbitrary and lacks a consistent legal standard, likening its handling of crypto to that of “Beanie Babies.”
“Assets—whether oranges, Beanie Babies, or crypto assets—do not become investment contracts in perpetuity simply because they were initially offered and sold to customers as part of a package ..”
SEC’s Legal Claims Under Scrutiny
In its amended complaint, the SEC alleges that certain token transactions constitute securities, extending beyond the initial offerings to secondary market resales. Binance & Zhao’s defense maintains that these resales should not be classified as securities transactions, emphasizing that each crypto transaction must meet specific criteria under securities law.
The motion asserts that the SEC’s claims “fail as a matter of law” and seeks a dismissal with prejudice, suggesting the SEC’s theories are flawed rather than the facts at hand.
The Ongoing Regulatory Battle
The SEC’s case against Binance represents a significant challenge in the evolving landscape of cryptocurrency regulation. As the legal battle unfolds, scrutiny of influencer and celebrity involvement in crypto projects is increasing, raising concerns about market integrity and investor protections. Binance’s fight against the SEC is emblematic of broader tensions within the crypto industry, where clarity and regulation remain contentious issues, further complicated by ongoing legal battles faced by other crypto exchanges and projects.
This ongoing conflict will likely influence how regulators approach cryptocurrency, affecting market sentiment and the future of digital assets in the United States.
