Binance and Founder Push Back on SEC’s Argument in Lawsuit
Binance and its founder Changpeng Zhao have responded to the U.S. Securities and Exchange Commission’s (SEC) argument regarding “investment contracts” in the agency’s lawsuit against them. In a filing submitted on Tuesday, Binance stated that the SEC’s complaint focused on transactions where customers bought tokens from anonymous owners through the website before logging off. The exchange emphasized that no contract existed with a promoter for investment into a common business enterprise. Binance further argued that the SEC failed to consider that the determination of an “investment contract” must be made on a transaction-by-transaction basis.
BAM Trading and BAM Management, the entities operating Binance.US, also expressed their disagreement with the SEC’s allegations. They contended in a separate filing that the digital asset transactions on BAM’s platform did not constitute investment contracts. The companies suggested that such significant questions should be addressed by Congress rather than the court due to the SEC’s history of territorial expansion.
Guilty Plea
Last week, Binance and Zhao pleaded guilty to criminal violations related to anti-money laundering requirements, according to a notice filed by the SEC. The agency highlighted that the court could take judicial notice of these facts from Zhao’s and Binance’s plea agreements and consider them in deciding the joint motion.
Hot Take: Binance Challenges SEC’s Interpretation of Investment Contracts
Binance and its founder Changpeng Zhao are actively contesting the U.S. SEC’s claims of “investment contracts” in their ongoing legal battle. Binance argues that the transactions at issue were conducted between customers who purchased tokens from anonymous owners without any contractual agreements with promoters for investment purposes. The exchange believes that an “investment contract” should be determined on a transaction-by-transaction basis, which the SEC allegedly overlooked. Similarly, BAM Trading and BAM Management, operating Binance.US, contend that the digital asset transactions on their platform do not constitute investment contracts. They suggest that Congress should address any ambiguity surrounding the term rather than leaving it to the court. Meanwhile, Binance and Zhao have recently pleaded guilty to criminal violations related to anti-money laundering requirements.
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