Lawyers have criticized the SEC for its lack of clarity regarding regulations on virtual assets, emphasizing the agency's failure to provide a clear standard for determining which crypto asset transactions qualify as investment contracts.
Key Details
- A motion to dismiss an amended complaint was filed on November 4 by lawyers representing Binance and former CEO Changpeng “CZ” Zhao.
- The motion argues that the SEC's amended complaint only superficially acknowledges a previous court ruling stating that crypto assets are not inherently securities. It contends that secondary market resales of these assets should not be classified as securities transactions.
- The filing claims the SEC wrongly categorizes nearly all crypto asset transactions, including blind secondary market resales, as securities transactions based on the assumption that buyers expect the assets to appreciate in value.
- The motion further criticizes the SEC for its arbitrary approach, highlighting the agency's refusal to clarify which transactions qualify as investment contracts, and its recent abandonment of the claim that Ether transactions are investment contracts without explanation.
Political Context
The SEC's lawsuit against Zhao and several companies, including BAM Management U.S. Holdings and Binance Holdings, was initiated in June 2023 and is distinct from criminal charges filed by the Department of Justice. In November 2023, Binance admitted to engaging in violations related to anti-money laundering and unlicensed money transmitting, resulting in a $4.3 billion fine. Zhao also faced four months of imprisonment but has since been released. The SEC continues to pursue cases against various cryptocurrency companies, recently issuing a Wells notice to the gaming company Immutable.
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