Binance and its founder Changpeng Zhao pushed back on the U.S. Securities and Exchange Commission’s argument surrounding “investment contracts” in the agency’s lawsuit against them.
Binance said in a filing on Tuesday that the SEC’s complaint “focuses on transactions by customers who clicked on a website, bought tokens from other anonymous token owners, and then logged off.”
“In none of the transactions at issue did a contract exist with a promoter to invest money into a common business enterprise,” the exchange added.
Binance argued that the SEC ignored the requirement that the existence of an “investment contract” must be determined on a transaction-by-transaction basis.
BAM Trading and BAM Management, the entities that operated Binance.US, also said Tuesday in a filing that the SEC has not adequately alleged that the digital asset transactions on BAM’s platform constitute investment contracts.
“[Even] if there is ambiguity about how to apply the term ‘investment contract’ to digital assets, such a major question should be addressed by Congress and not by a court, a separation of powers proven necessary by the SEC’s own history of territorial aggrandizement,” the companies said.
The two filings come as Binance continues to try to dismiss the lawsuit the SEC filed in June. The SEC sued Binance and its founder Changpeng Zhao over alleged violations of the country’s securities laws, alleging the crypto exchange lied to customers and misdirected funds to a separate investment fund owned by Zhao.
Guilty plea
Last week, the SEC filed a notice to inform the court that Binance and Zhao pleaded guilty to criminal violations involving anti-money laundering requirements.
“This Court may take judicial notice of facts contained in Zhao’s and Binance’s plea agreements and the Consent Order, and consider them in deciding the Joint Motion,” the SEC added.
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