The CEO of Binance, Changpeng “CZ” Zhao, and the cryptocurrency exchange have collaboratively submitted a request for the dismissal of the lawsuit initiated by the U.S. Securities and Exchange Commission (SEC).
Binance Holdings and Zhao both argued that the SEC had overstepped its bounds in the action in a document submitted to the U.S. District Court for the District of Columbia on September 21.
The legal counsel for Binance and Zhao claimed in the 60-page petition that before bringing a complaint against the cryptocurrency exchange, the SEC had not made clear regulations for the industry. They said that, as a result, the SEC has attempted to impose its regulatory power over the crypto industry in the past.
The filing states that the SEC “distorts the text of the securities laws” by omitting the word “contract” from the statutory phrase “investment contract” in an effort to assert regulatory authority over the cryptocurrency business. The SEC also wants to expand its jurisdiction to cover transactions on international cryptocurrency exchanges, going against Supreme Court precedent that says the agency’s regulatory authority ends at the border with the United States.
SEC Files Lawsuit Against CEO of Binance
The largest cryptocurrency exchange in the world and its CEO were both sued by the U.S. Securities and Exchange Commission today on 13 counts. According to a court document, the digital asset behemoth and its CEO, Changpeng ‘CZ’ Zhao, who is also Binance’s founder and majority shareholder, have been charged with violating U.S. securities laws, as was originally reported by Bloomberg. The unregistered offer and sale of digital assets, as well as the failure to prevent U.S. investors from accessing Binance.co, are among the SEC’s claims.
The petition asserted that the SEC retroactively applies novel theories without prior public guidance on digital assets, aiming to hold individuals accountable for crypto asset sales dating as far back as July 2017.
Binance Holdings Limited and Zhao are attempting to have the case dismissed since the SEC is not authorised to do this.
BAM Trading Services, the company’s American affiliate that runs the Binance.US exchange, is also listed among the defendants.
A representative for Binance told Decrypt that the SEC “has distorted the securities laws and is trying to seize regulatory power over the crypto industry.” We’ve asked the court to reject the SEC’s claims in their entirety since the SEC has no right to regulate cryptocurrency exchanges.
SEC vs. Binance
In June, the SEC filed a lawsuit against Binance and its affiliates, saying that Binance was selling unregistered securities and conducting business illegally in the US.
Billion-dollar customer funds “were commingled in an account” that belonged to Merit Peak, a company under Zhao’s control, according to the SEC’s initial complaint. The SEC requested an emergency order freezing Binance US’s assets the day after the lawsuit was filed in order to protect consumer funds.
Recently, Binance has come under increased pressure from the SEC, which has been blaming the cryptocurrency exchange for “lack of transparency.” The action followed an agreement reached between Binance.US and the SEC, which avoided a freeze in exchange for more openness and monitoring. The agreement included a clause stating that Zhao and any companies he owns or controls are not allowed access to the money.
A district judge granted the Securities and Exchange Commission’s (SEC) request to unseal records in its complaint against Binance US on Friday, according to a court document. Due to the information’s prior secrecy filing by the regulator in August, only the lawyers involved in the litigation were able to access it. On the other hand, the SEC moved to make a number of papers public on Thursday, including exhibits for a declaration given by SEC Trial Counsel Jennifer Farer. Parties to the complaint include…
Additionally, a district judge granted the SEC’s request to unseal specific records in its complaint against Binance earlier this month. US
The ongoing regulatory proceedings have had a significant impact on trading activity at Binance.US, with daily trading volumes falling by more than 98% since September 2022.
A new round of layoffs at Binance began on September 13. With the departure of its president and CEO, Brian Shroder, the US saw the exchange lose around a third of its personnel.