SEC’s Final Effort? SEC Files Amended Lawsuit Accusing Binance and CZ of Illegal Securities Trading
The U.S. Securities and Exchange Commission (SEC) has once again filed an amended lawsuit against the renowned exchanges Binance and Binance.US, as well as former CEO Changpeng Zhao (CZ). The SEC continues to allege that they are unregistered securities exchanges and have conducted unauthorized securities trading through the platform token BNB. The latest amended lawsuit focuses on the debate over whether 10 cryptocurrencies comply with U.S. securities laws, once again becoming a hot topic of discussion.
Background of Initial Lawsuit and Amended Lawsuit by SEC
The SEC first filed charges against Binance and CZ on June 5 last year, alleging that they were unregistered securities exchanges and violated U.S. securities laws. The tokens involved in this case include Solana ($SOL), Cardano ($ADA), Polygon ($MATIC), and 10 other tokens.
The case entered the amended lawsuit phase in November 2023, mainly because U.S. District Court Judge Amy Berman Jackson found the legal basis of the initial SEC lawsuit insufficient and requested more details to be provided.
After multiple back and forth litigations, the SEC has once again strengthened the lawsuit content in the new amended lawsuit document, interpreting the “Howey Test” to determine whether the 10 tokens mentioned constitute securities.
The “Howey Test” as the Core Issue
The SEC’s allegations this time are based on the “Howey Test” established by the U.S. Supreme Court in 1946 to determine whether an asset constitutes a security. The SEC in the amended lawsuit elaborates on the trading status of each token in the secondary market and how these tokens meet the three key elements of the “Howey Test”:
1. Involvement of a monetary investment.
2. Expectation of profits by investors.
3. Profits derived from the efforts of a third party.
The SEC has been trying to prove that these 10 tokens meet the legal definition of securities to support the charges against Binance and CZ.
Ongoing Conflict between SEC and Binance and CZ
Binance’s legal team previously filed a motion to dismiss the SEC lawsuit on November 4, stating that the SEC only superficially complied with the court’s preliminary ruling and did not acknowledge the outcome of the ruling or the core logic expressed by the court, which is that “resales in the secondary market years after an IPO are not considered securities trading.”
Binance also emphasized that the SEC’s amended complaint that all cryptocurrency transactions are considered securities trading is completely against legal norms and requested the court to completely dismiss the lawsuit and not allow the SEC to amend the complaint again.
However, in the SEC’s latest filing, they also responded to Binance and CZ’s rebuttals and mocked their criticism of the SEC’s excessive regulation: “They complain that the SEC is suffocating the entire cryptocurrency industry, but such a situation has not occurred at all.” At the same time, the SEC also emphasized in the document that Binance has continued to deliberately evade U.S. laws in its operations, clearly challenging industry transparency.
(SEC Steps up with New Allegations of “Blind Resales,” Binance and CZ Request Dismissal of Lawsuit)
