Binance and its founder Changpeng Zhao (CZ) have requested the dismissal of the SEC’s lawsuit, arguing that the agency failed to demonstrate how the complaint meets the Howey test.
Binance, the world’s largest cryptocurrency exchange with over $50 billion in daily trading volume, along with its founder Changpeng Zhao (CZ) has recently made a move asking the courts to dismiss the ongoing lawsuit filed by the US SEC. Binance argues that the SEC has failed to demonstrate how its complaint meets the Howey test, justify its claims against third-party tokens, or validate its request for disgorgement to proceed to the discovery phase.
As per the filing submitted to the District Court of Columbia, Binance and its founder CZ have urged to end the case. The two defendants argued that the US Securities and Exchange Commission failed to demonstrate each “particular transaction” in consideration that qualifies as an investment contract under the Howey test.
Furthermore, they stated that the agency didn’t provide a clear method for the court to differentiate tokens sold as investment contracts from other classified commodities like Bitcoin BTC $105 164 24h volatility: 0.7% Market cap: $2.09 T Vol. 24h: $15.58 B and Ethereum ETH $2 528 24h volatility: 1.1% Market cap: $305.26 B Vol. 24h: $12.19 B .
The exchange also claims that the SEC has not sufficiently explained how the transactions violated the Exchange Act or how token sales involving developers should be classified as investment contracts. Moreover, Binance in its argument noted that the SEC hasn’t shown why they should proceed without involving the developers of third-party tokens. As a result, the exchange asserted that it was unfair on the part of the US SEC to target ten specific tokens among many.
Binance also added that neither has the SEC proven any financial harm caused by the exchange, which is a necessary condition for seeking disgorgement. Thus, Binance and CZ have requested the court to dismiss the SEC’s claims against them.
Binance vs SEC Lawsuit Dismissal Soon?
In the recent filing, the crypto exchange argued the SEC also failed to prove that secondary sales of BNB $646.3 24h volatility: 1.0% Market cap: $94.29 B Vol. 24h: $430.98 M on Binance.US were investment contracts. The exchange also contends that the SEC’s token-by-token analysis is inadequate and lacks sufficient evidence to support its claims.
Furthermore, Binance claims that the SEC has not provided a clear framework to distinguish between tokens in the marketplace that are securities and those that are not. The filing also points out that no registration claims were made against Binance.US outside of secondary sales.
The exchange asserts that the SEC’s claims under the Exchange Act cannot proceed based solely on staking and argues that Binance.US did not list securities.
In the meanwhile, Binance’s native BNB Coin saw some upside today but faces rejection at $700. Following a convincing breakout past $700, the BNB coin can rally to $1,000, per analysts’ expectations.
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