According to Binance, the SEC lawsuit has no basis in the nation’s securities laws.
Cryptocurrency exchange Binance and its CEO Changpeng Zhao (CZ) have jointly filed a motion for the dismissal of the United States Securities and Exchange Commission (SEC) lawsuit against them.
On June 5, the SEC filed thirteen charges against Binance, its CEO, and its subsidiaries. SEC accused Binance of everything from operating as an unregistered exchange to misrepresenting trading controls and selling unregistered securities. It also alleged that CZ and other Binance entities were extensively involved in deception, law evasion, and other such matters.
Examining the Binance Motion to Dismiss SEC Lawsuit
On September 21, Binance and CZ submitted a 60-page petition to the court. The motion accused the SEC of imposing its authority on the crypto sector retroactively. Specifically, the paper cited the SEC chairman’s public acknowledgment there was no ‘regulatory framework” under its office in 2021.
Despite ongoing efforts by Congress to come up with a holistic framework, the motion claimed the regulator began asserting its authority over crypto exchanges in 2022. Indeed, the SEC began to pursue regulation by litigation, asserting that crypto assets were securities.
“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,” the filing surmised.
Elsewhere, the report also accused the SEC of constantly misinterpreting securities laws and how they apply to crypto assets. According to Binance, the SEC lawsuit has no basis in the nation’s securities laws. Thus, the exchange accused the regulator of always distorting “the text of the securities laws” to claim authority over the industry.
Binance.US Also Filed Motion to Dismiss
Meanwhile, Binance US Entity, Binance.US also filed a 56-page dismissal motion against the SEC lawsuit. Despite naming the SEC’s demands as unreasonable, the lawsuit hit Binance.US hard.
According to unsealed court documents, one of the talking points of the SEC is a request for an explanation of the $250 million convertible note owed to Zhao. Recall that Binance has always claimed that its US entity is independently run. SEC believes the money may suggest otherwise.
Since the lawsuit, daily trading activity has been down by as much as 98% compared to September last year. On September 13, Binance.US laid off 30% of its workforce to handle the shortfall. Company president and CEO Brian Shroder also left the firm.
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