Binance and its founder, Changpeng Zhao, have filed a motion to dismiss the US Securities and Exchange Commission’s (SEC) amended complaint.

In a Nov. 4 court filing, Binance and Zhao’s legal team argued that the SEC has only superficially acknowledged a prior court ruling, which clarified that crypto is not inherently classified as a security.

According to them, the SEC’s expanded lawsuit contradicts an existing court ruling that distinguished crypto from securities. The exchange highlighted that the SEC’s position disregards the logical implications of that ruling, which suggests that secondary market resales of digital assets do not constitute securities transactions after their developers initially distributed the assets.

The defendants further argued that the amended complaint lacks a clear legal foundation to distinguish between assets involved in investment contracts and the investment contracts themselves.

The filing stated:

“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 of promises and expectations that collectively qualify as ‘investment contracts’ under the Howey test.”

Binance further explained that token sales over exchanges are generally impersonal. When one party places an order to buy and another places an order to sell, the transaction is completed by matching software without direct interaction. In these cases, buyers lack any reasonable expectation that their funds are invested into a joint enterprise aimed at generating profits. Without this expectation, the transaction fails to meet the requirements of an investment contract under securities law.

So, Binance is seeking the dismissal of the amended complaint and wants specific portions of the SEC’s requested relief removed from consideration.

Blind sales

Additionally, Binance and Zhao contested the SEC’s classification of alle

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Author: Oluwapelumi Adejumo