Binance Pushes Back Against SEC in Expanded Crypto Securities Case

In its ongoing legal struggle, Binance and its former CEO Changpeng “CZ” Zhao have defended the company against the U.S. Securities and Exchange Commission (SEC). Axie Infinity Shards (AXS), Filecoin (FIL), Cosmos’ ATOM, The Sandbox’s SAND, and Decentraland’s MANA are some of the new tokens that the SEC claims should be categorized as securities. In a recent petition filed on November 4, Binance’s legal team requested that the court dismiss the SEC’s amended lawsuit. With legal arguments on asset classification, Binance seeks to refute the SEC’s broadened approach to crypto regulation, as shown in its amended claims.

Binance Argues Tokens Do Not Automatically Classify as Securities

In their defense, Binance’s lawyers argue that the SEC’s updated complaint misunderstands fundamental distinctions between securities and crypto assets. According to Binance, the SEC wrongly assumes that simply selling a token equates to a securities transaction. Instead, Binance’s legal team insists that each token sale should be evaluated individually to determine if it meets the criteria of a securities transaction, arguing that “the SEC’s claims fail as a matter of law.”

A central point of Binance’s defense is the role of “blind transactions.” These transactions, which occur on secondary markets without a direct connection to the issuer, raise questions about the link between buyers’ profit expectations and securities classification. The SEC contends that these secondary market transactions may still qualify as securities sales since buyers might assume the asset’s value will increase. Binance, however, counters this, arguing that buyers on secondary markets often lack any contractual expectations for profit from the original developers.

In a decisive request, Binance’s legal team has asked the court to reject the SEC’s claims entirely and block further amendments. They argue that the SEC’s approach contradicts established legal principles, as it tries to broadly label crypto transactions as securities. Binance’s attorneys assert that merely holding a speculative expectation of profit among buyers does not inherently meet the legal definition of a securities transaction.

By challenging the SEC’s broad classification, Binance continues to defend its operations and the legal status of numerous crypto tokens. As this high-profile case progresses, the court’s decision could set significant precedents for crypto regulation and the treatment of digital assets in the U.S.