Binance.US, along with Binance and its CEO Changpeng Zhao, have jointly submitted a motion seeking the dismissal of a lawsuit initiated by the United States Securities and Exchange Commission (SEC).
Furthermore, in their comprehensive 60-page submission, the legal representatives make the argument that the SEC has exceeded its regulatory boundaries. They assert that the SEC has overstepped its authority by initiating this lawsuit.
The defendants argue that the SEC’s actions were unjustified. Moreover, they claim that the SEC failed to provide clear guidelines for the cryptocurrency sector before resorting to legal action. Essentially, they are contending that the SEC is attempting to assert authority retroactively.
The SEC’s lawsuit alleges that Binance, Zhao, and Binance.US unlawfully listed unregistered securities, which are various cryptocurrencies, for trading and investment by U.S. investors. This legal battle has also sparked a dispute concerning the accessibility of customer funds on Binance.US.
An essential argument in the motion to dismiss centers on the assertion that the SEC has expanded its definition of an ‘investment contract’ to include a broad range of crypto assets and transactions. Binance and Zhao’s legal team maintains that this interpretation of securities laws, and its application to cryptocurrencies, is fundamentally flawed.
The motion emphasizes that the SEC’s lawsuit seeks to hold Binance and its affiliates responsible for crypto asset sales as far back as July 2017. This is despite the absence of clear regulatory guidance on cryptocurrencies during that time. The petition argues that the SEC’s lawsuit is inadequately grounded within the framework of existing securities laws.
Binance and Its CEO: Legal Battles, Workforce Reduction, and Regulatory Impact
Binance and Zhao contend that since 2019, Congress has explored multiple proposals for establishing a comprehensive cryptocurrency framework. None of these proposals would grant exclusive regulatory authority over the crypto industry to the SEC.
Consequently, they argue that the SEC is exceeding its jurisdiction in its quest for regulatory dominance over the crypto sector.
On the same day, Binance.US, officially known as BAM Trading Services Inc., filed a 56-page submission to request the dismissal of the charges brought against it.
However, the SEC’s legal action against Binance and its affiliates mirrors a parallel lawsuit filed by the Commodity Futures Trading Commission (CFTC). The CFTC accused Binance of unlawful operations in the United States and failure to register with the CFTC.
The ongoing regulatory actions against Binance, including the SEC lawsuit, have had a profound effect on trading activity at Binance.US. Since September 2022, daily trading volumes on the platform have plummeted by more than 98%.
In response to these challenges, Binance.US was forced to cut its workforce by 30%. Additionally, the company’s president and CEO, Brian Shroder, resigned from his position.
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