Attorneys for Binance and its former CEO Changpeng “CZ” Zhao have filed a motion to dismiss the Securities and Exchange Commission’s (SEC) amended lawsuit against them, citing a lack of regulatory clarity on digital assets. The motion, filed on Monday, targets an amended complaint submitted by the SEC last month.
The defense argues that the SEC’s amended complaint dismisses a prior court ruling that established crypto assets are not inherently securities.
Binance’s lawyers contend that “secondary market resales of the assets long after they were first distributed by their developers are not ‘securities’ transactions.” According to their filing, the SEC is asserting that all transactions involving digital assets qualify as securities simply because buyers may anticipate a future increase in asset value.
Binance’s legal team also criticized the SEC for failing to establish clear regulatory guidelines. “The SEC still refuses to articulate any standard for courts, litigants, or market participants to know which crypto-asset transactions qualify as investment contracts,” the filing noted. It highlighted that the SEC recently dropped its claim that transactions involving Ether are investment contracts, without explanation.
The SEC originally filed its lawsuit against Zhao and Binance in June 2023. The case is distinct from criminal charges filed by the Department of Justice (DOJ), which resulted in Binance paying $4.3 billion in fines for money laundering and sanctions violations. Zhao, who spent four months in prison, has since been released.
The SEC has pursued actions against other crypto firms recently, including a Wells notice issued last week to blockchain gaming firm Immutable.
