Binance and its founder, Changpeng Zhao, have filed a motion in the District Court of Columbia requesting the dismissal of the lawsuit by the U.S. Securities and Exchange Commission (SEC), arguing that the complaint does not meet legal standards. The company criticizes the SEC’s classification approach of tokens like Bitcoin and Ether as investment contracts.
Discussion of the Howey Test and Binance’s Defense
Binance claims that the SEC failed to adequately apply the Howey test in its complaint. The Howey test is used to determine whether an asset constitutes an investment contract. The company states that the SEC did not provide sufficient evidence to support claims that each token represents a separate investment contract and noted a lack of a framework to distinguish Bitcoin (BTC) and Ether (ETH) from securities.
Allegations Against BinanceUS and Legal Proceedings
BinanceUS contended that the SEC could not prove transactions on its platform are investment contracts. The company expressed that investors do not expect profits from the efforts of others through these transactions. Additionally, BinanceUS emphasized that the SEC’s token-based analyses are inadequate and that it did not offer a regulatory framework to differentiate tokens from securities and other assets.
Impact on Cryptocurrency Market
This move by Binance is considered a significant step regarding regulations in the cryptocurrency markets. The defense put forth by the company holds great importance for market regulation and cryptocurrency law. Meanwhile, following these developments, the price of BNB increased by 2%, reaching $685.20. Investors anticipate that CZ Zhao’s positive remarks could lead the token to reach $800.
This lawsuit is expected to shape future legal regulations in the cryptocurrency market. Binance’s defense could trigger an important discussion within the industry.
