The U.S. Securities and Exchange Commission (SEC) has pushed back against efforts to dismiss its lawsuit against cryptocurrency exchange Binance, its U.S. branch Binance.US, and former CEO Changpeng Zhao.

The regulator accuses them of running an unregistered securities exchange through the trading of BNB, Binance’s native token, and ten other cryptocurrencies.

Details From the Filing

The case relies on the Howey Test, a legal standard used to determine if something qualifies as a security. In simple terms, the test examines whether there was an investment of money, a common enterprise, and an expectation of profit derived from the efforts of others.

The SEC claims the Binance case satisfies all three criteria. It says the exchange made users believe the value of their tokens depended on the success of Binance’s ecosystem, creating an expectation of profits.

Its filing goes further by challenging Binance’s position that secondary market trades fall outside the scope of securities laws, asserting that such transactions are also governed by the Howey Test.

The financial watchdog’s lawsuit, which was first filed earlier this year, faced criticism from Judge Amy Berman Jackson, who questioned some of its arguments. This led the SEC to amend its complaint. Binance and Zhao responded by lodging a motion to dismiss the amended complaint on November 4, arguing the regulator failed to provide enough evidence.

However, in its newest court filing, the SEC continues to target BNB and ten other cryptocurrencies, labeling them securities. These include Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Cosmos (ATOM), The Sandbox (SAND), Decentraland (MANA), Algorand (ALGO), Axie Infinity (AXS), and COTI.

The SEC also pushed back against criticism from the crypto industry, rejecting claims that it is overstepping its authority. In its filing, the agency stated, “The foretold vast and purported suffocating assertion of regulatory dominion over an entire industry has not occurred, but they complain about that, too.”

Industry Experts Weigh In

Meanwhile, not everyone agrees with the regulators methods. Paul Grewal, Coinbase’s legal chief, criticized the agency for what he sees as inconsistent enforcement. In a tweet, he questioned why the SEC never classified Ethereum (ETH) and Bitcoin (BTC) as securities.

Ripple’s legal officer, Stuart Alderoty, also weighed in, criticizing SEC Chair Gary Gensler, who is set to step down on January 20, 2025, with President-elect Donald Trump planning to replace him with Paul Atkins, a pro-crypto advocate. Alderoty accused Gensler of rushing to file the latest 81-page brief before leaving office, describing it as recycling ‘failed arguments.’

Crypto attorney John Deaton added his voice, urging the SEC to reread the original Howey decision. He emphasized the ruling’s statement that it doesn’t matter whether an asset has intrinsic value or whether the enterprise is speculative.