Binance And Changpeng “CZ” Zhao File To Dismiss US SEC Lawsuit: Court

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As a seasoned researcher who has followed the crypto market for years, I find myself drawn to the recent legal battle between Binance and the SEC. My personal experience has taught me that such court cases can significantly impact the trajectory of a project or platform, and the outcome of this case could set a precedent for other exchanges operating in the US.

In simpler terms, Binance and its founder Changpeng “CZ” Zhao have asked a court to dismiss a lawsuit filed by the U.S Securities and Exchange Commission (SEC). They argue that the SEC has not provided sufficient evidence to support their allegations according to the Howey test, they question why the SEC can pursue its case against tokens issued by third parties, and they believe the request for disgorgement should be further investigated before any action is taken.

In response, representatives from the crypto sector, led by Ripple‘s General Counsel Stuart Alderoty, countered the Securities and Exchange Commission. They argued that the SEC once more employed outdated reasoning to resist dismissal, asserting that cryptocurrencies do not possess an inherent value by nature.

Binance Asks Court to Dismiss SEC Lawsuit

As an analyst, I’m reporting on a recent legal development: Binance and its founder, Changpeng “CZ” Zhao, have petitioned the District Court of Columbia to discard the lawsuit brought forth by the U.S. Securities and Exchange Commission (SEC). In addition, BinanceUS has submitted its own filing in support of this motion to dismiss the SEC’s complaint against them.

In response to the U.S. Securities and Exchange Commission’s objection to dismiss the case, the leading crypto exchange and CZ have countered by claiming that the agency did not demonstrate that each specific transaction at hand qualifies as an investment contract according to the Howey test. Furthermore, they argue that the SEC failed to propose a clear method for the court to differentiate tokens sold as investment contracts from those sold as commodities like Bitcoin (BTC) and Ether (ETH).

Exchange and Founder Changpeng Zhao’s Arguments

Binance asserts that the Securities and Exchange Commission (SEC) has not demonstrated that its complaint meets the requirements of the Howey Test. They argue that the transactions in question do not comply with the Exchange Act, and that token sales involving developers can be considered investment contracts.

Additionally, the agency failed to provide reasoning as to why the case could progress without the involvement of the developers of the third-party tokens. The cryptocurrency exchange contended that it wasn’t essential for the agency to focus on ten specific third-party tokens out of numerous available options.

Additionally, the filing argued that the Securities and Exchange Commission (SEC) did not disclose that any investor had sustained financial loss – a prerequisite for the SEC to pursue disgorgement.

In essence, Binance and its CEO, Changpeng Zhao, are asking the court to throw out the Securities and Exchange Commission’s (SEC) accusations against them. Moreover, it appears that the SEC has not addressed the issues pointed out by the court in their earlier ruling regarding the deficiencies in the SEC’s initial pleadings.

BinanceUS Supports the Dismissal of SEC Lawsuit

The argument suggests that Binance.US transactions are not considered investment contracts by the government agency, as investors did not have realistic assumptions of earnings derived from other people’s actions.

Additionally, the breakdown of individual tokens indicates that the Securities and Exchange Commission’s accusations appear weak. Furthermore, it seems that the regulatory body has not established a clear distinction between tokens in the marketplace that are considered securities and those that are not.

According to the filing, no registration disputes regarding BinanceUS were reported outside of secondary sales. The Exchange Act claims brought by the SEC cannot proceed based solely on staking activities. The Binance branch determined that it did not list securities, and certain counts from the first amended SEC lawsuit need to be dropped.

Over the past day, the value of BNB has risen by 2%, now standing at approximately $685.20. There’s speculation that it could reach $800 due to a recent optimistic statement from CZ about the token.

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2024-12-24 13:48