Binance and CZ Move to Dismiss SEC’s Amended Complaint, Arguing Secondary Market Crypto Resales Aren't Securities Transactions

Binance and its former CEO, Changpeng “CZ” Zhao, have formally requested the dismissal of the latest charges by the U.S. Securities and Exchange Commission (SEC), continuing their defense against regulatory scrutiny over certain cryptocurrency assets.

Key Developments

In a motion filed on November 4, Binance’s legal team urged the court to dismiss the SEC’s amended complaint, which seeks to classify additional tokens, including Axie Infinity Shards (AXS), Filecoin (FIL), Cosmos’ ATOM, The Sandbox’s SAND, and Decentraland’s MANA, as securities.

The Argument Against SEC’s Claims

Binance’s legal defense argues that the SEC’s amended complaint “fails as a matter of law,” claiming the SEC misinterprets the legal status of crypto assets. The motion highlights that the court has previously rejected the SEC’s approach of equating crypto assets with investment contracts, acknowledging that each transaction must independently meet securities law criteria.

Furthermore, Binance’s attorneys emphasize a critical distinction: while crypto assets may be initially distributed under investment contracts, this does not mean all subsequent transactions classify as securities. In their view, the SEC’s refusal to acknowledge this distinction disregards the court's initial ruling that “crypto assets are not inherently ‘securities.’”

The motion concludes that secondary market sales of these assets, occurring long after their original issuance, should not be considered securities transactions.

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