The U.S. Securities and Exchange Commission (SEC) has been quite silent in recent weeks following the election of Donald Trump and a Republican majority in Congress, but on Thursday, the financial regulator reawakened, pushing back against Binance's bid to dismiss a lawsuit alleging that Binance's sales of its BNB coin and other cryptocurrencies were a violation of securities laws.
The SEC, still under Chair Gary Gensler's leadership until Jan. 20, 2025, said the court should junk crypto exchange giant Binance's motions to dismiss the SEC's lawsuit.
SEC Insists Case Should Move Forward
The Wall Street regulator said in a Thursday filing that it has filed an amended complaint to allege that "Binance obtained billions of dollars in ill-gotten gains from their violations of the federal securities laws."
The SEC went on to explain that Binance and "the other Ten Crypto Assets' issuers" were targeting retailers, using widespread promotions to paint the purchase of crypto tokens as an investment where they can see gains when the assets increase in value.
Among the 10 crypto coins in question are Cardano (ADA), Algorand (ALGO), Solana (SOL), Polygon (MATIC), and Filecoin (FIL).
Gensler SEC Blasts Binance's 'Reliance' on Ripple Case
The SEC also said Binance shouldn't use Ripple's case as an example in its defense, saying that in Binance's case, "the Amended Complaint meets that [Howey] test."
The Howey Test has four criteria that an asset must meet to qualify as an investment contract. The said test was used in the SEC's lawsuit against Ripple, wherein a judge ruled that the fintech giant's XRP asset sales don't violate securities laws when the tokens are sold on exchanges.
For the SEC, Binance's "reliance" on Ripple's partial victory is "misplaced" and cannot be applied in its case.
Crypto Lawyers React to 'Recycled' Filing
The rise of the crypto industry also led to the entry of lawyers with deep knowledge of blockchain technology and crypto. Since the SEC started looking into the emerging sector, crypto lawyers have also been following the cases closely, including the contested Binance complaint.
For Ripple's Chief Legal Officer Stuart Alderoty, the SEC's latest move is just "recycling the same failed arguments – including the absurd (and unsupported) claim that crypto has no inherent value."
Alderoty also criticized Gensler for pushing the case even as he is due to leave the regulatory agency in a few weeks. The Biden-appointed SEC chief announced late last month that he will resign during U.S. President-elect Donald Trump's inauguration.
John Deaton, who helped XRP holders in the SEC's case against Ripple, said he would refuse to sign his name "to such nonsense," referring to the Thursday filing.
Coinbase Chief Legal Officer Paul Grewal has also joined in, questioning the irony of the SEC's case against Binance when it can't explain its avoidance of including Bitcoin and Ethereum into the mix.
"Do they offer one word explaining how this same bogus logic somehow avoids ETH? Or BTC? Nope. Because they can't," he said.
Binance has yet to release a statement on the matter.
