Binance, Binance US, and Changpeng Zhao have stated that the lawsuit filed against them by the U.S. Securities and Exchange Commission (SEC) has been subject to the “Howey Test.” In a new filing on December 12, the company asserted that the requirements for “a test that determines whether a

Binance and Mr. Zhao (commonly known as CZ), along with Binance US, filed a response to the SEC’s claims. Binance US claims that the SEC has not shown that the exchange’s customers have entered into contracts that meet the definition of an “investment contract,” and that it meets other elements of Supreme Court precedent. , but submitted similar documents.

This is because the SEC alleges that Binance and Binance US have allowed the general public to purchase and trade unregistered securities by listing certain crypto assets (virtual currencies) and providing staking services. It’s the latest response from authorities seeking to dismiss a lawsuit filed in June.

Binance recently settled various charges with the U.S. Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), Office of Foreign Assets Control (OFAC), and Financial Crimes Enforcement Network (FinCEN), but in September the SEC filed a lawsuit. (The CFTC made a similar argument in July when it filed a motion to dismiss the lawsuit.)

Binance and Binance US both said in Tuesday’s filings (in response to the SEC’s motion to dismiss) that regulators may require users of their exchanges to have certain obligations after purchasing certain crypto assets. It argued that there were no investment contracts that required the Howie test.

Settlement with the Department of Justice

Binance has also pushed back against the SEC, adding to the exchange’s guilty plea to the Department of Justice, FinCEN’s consent order, and Zhao’s plea to the Department of Justice in ongoing litigation.

The SEC says these settlements show that Binance was fully aware that it operated in the United States, served American customers, and utilized American infrastructure for trading. He claimed that there was.

“Zhao and Binance’s plea agreement and consent order provide further basis for the court to deny the joint motion to dismiss,” the SEC said.

In a separate filing on the 12th, Binance said that securities laws, like the Bank Secrecy Act (BSA) and the International Emergency Economic Powers Act (the two charges that Binance and Mr. Zhao settled against), argued that it did not apply. Binance and Mr. Zhao argued that “acceptance of jurisdiction under the BSA does not bring SEC claims within the scope of the Exchange Act.”

It also argues that the settlement and consent order do not implicate securities laws.

“Even if the plea agreement with the Department of Justice indicates that Binance Holdings Limited (BHL) and Mr. Zhao violated the BSA, there is no guarantee that the crypto assets in question are subject to securities or exchange laws. “It does not address whether the SEC’s theory that it is a security was fairly notified,” the filing states.

｜Translation: CoinDesk JAPAN
｜Edited by: Toshihiko Inoue
｜Image: Danny Nelson/CoinDesk
｜Original text: SEC Hasn’t Met Legal Requirements to Sue, Binance Says in Latest Bid to Dismiss Lawsuit