Legal Battle: Binance vs. SEC
Binance Holdings, along with its U.S. counterpart and CEO Changpeng Zhao (CZ), have taken a bold step by filing motions in an attempt to have the lawsuit brought against them by the United States Securities and Exchange Commission (SEC) dismissed.
SEC's Allegations Questioned
In a joint motion filed by Binance CEO Changpeng Zhao and the cryptocurrency exchange, submitted to the United States District Court on September 21, both parties argue that the SEC has overstepped its regulatory authority with the lawsuit.
Regulatory Overreach Contested
Within the extensive 60-page petition, lawyers representing Binance and Changpeng Zhao contend that the SEC failed to establish clear guidelines for the cryptocurrency sector prior to initiating legal action against the exchange. Consequently, they argue that the SEC is retroactively asserting regulatory control over the crypto industry.
Retroactive Enforcement Critiqued
The petition states, "The SEC pursues these novel theories retroactively, seeking to impose liability for sales of crypto assets that occurred as far back as July 2017, before the SEC provided any public guidance concerning cryptocurrency."
Furthermore, they argue that the SEC's lawsuit lacks a foundation in the currently enacted securities laws. Lawyers for Binance assert that the regulator is fundamentally misinterpreting these laws and their application to cryptocurrency assets.
Challenging SEC's Authority
The filing also asserts, "In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws."
In a separate 56-page filing made on the same day, the American arm of the crypto exchange, known legally as BAM Trading Services Inc. but operating as Binance.US, also seeks the dismissal of the charges brought against it.
The SEC initiated legal proceedings against Binance and its affiliates on June 5, leveling a series of charges that accused Binance of offering unregistered securities and operating unlawfully in the United States.
Ongoing Regulatory Pressure
The SEC's actions followed a similar lawsuit by the Commodity Futures Trading Commission (CFTC) against Binance, alleging failure to register with the CFTC and violations of its regulatory guidelines.
The ongoing regulatory actions against Binance have significantly impacted trading activity on Binance.US, with daily trading volumes plunging by over 98% since September 2022. On September 13, Binance.US announced a reduction of 30% in its remaining workforce, accompanied by the departure of its president and CEO, Brian Shroder.