- Binance, Binance.US, and CEO Changpeng Zhao have filed a motion to dismiss the SEC’s lawsuit against them
- The SEC seeks to ban their operations in the U.S. and impose fines in addition to a CFTC lawsuit
- Binance questioned the agency’s authority in the matter and its securities definition
Binance, Binance.US, and the group’s CEO Changpeng Zhao have filed a motion to dismiss the lawsuit brought in June by the U.S. Securities and Exchange Commission (SEC). The SEC’s lawsuit accuses these entities of illegally listing unregistered securities in the form of cryptocurrencies, enabling trading and investment by U.S. investors, but Binance argues that the SEC is operating past its purview and questions the agency’s suggestion that it ignored its entreaties to engage over the matter.
SEC: Binance Sold Securities Without Registering
The three entities were sued earlier this year around two key allegations: that Binance operated an unregistered exchange in violation of U.S. law, effectively evading the regulatory oversight; and that it commingled customer assets, directing billions of dollars of customer funds into an account controlled by Zhao.
The SEC’s lawsuit seeks far-reaching consequences, including a ban on Binance, Binance.US, and Zhao from operating within the United States, along with the imposition of substantial fines and disgorgement of profits.
The lawsuit also named the 12 securities Binance is said to have sold, which were cryptocurrencies including BNB, BUSD, SOL, ADA, MATIC, FIL, and ATOM.
Binance Question’s SEC’s Definitions
In its request to dismiss, Binance criticizes the SEC’s refusal to engage in productive settlement negotiations and instead decision to opt for litigation over negotiation. This reflects a broader trend experienced by many cryptocurrency exchanges, most notably Coinbase, when dealing with the SEC’s regulatory demands.
Additionally, Binance asserts that the SEC’s broad interpretation of the term “investment contract” exceeds its jurisdiction and highlights the “major questions doctrine.” This Supreme Court ruling suggests that federal agencies should await Congressional authority when dealing with significant economic or political matters.
Binance’s claim should be assisted by Ripple’s recent victory over the SEC with regard to the securities question, although the ruling may be overturned by the time this case gets to court…if it gets that far.