22-9-2023 (SAN FRANCISCO) Binance CEO Changpeng “CZ” Zhao and his cryptocurrency exchange, Binance Holdings, have jointly filed a motion to request the dismissal of the United States Securities and Exchange Commission (SEC) lawsuit against them.
In a filing submitted on September 21 to the United States District Court, both Binance Holdings and Zhao argue that the financial regulatory body has exceeded its authority in its lawsuit against them.
In a comprehensive 60-page petition, lawyers representing Binance and Zhao contend that the SEC failed to provide clear industry guidelines before initiating legal action against the cryptocurrency exchange. Consequently, they assert that the SEC is retroactively asserting regulatory jurisdiction over the cryptocurrency sector.
“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 petition states. “It is clear that the SEC’s lawsuit has no foundation in the currently enacted securities laws.”
Binance’s legal team also argues that the regulator has fundamentally misinterpreted securities laws and their application to cryptocurrency assets. The filing states, “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 on the same day, Binance.US, the American arm of the crypto exchange, legally known as BAM Trading Services Inc., also reportedly sought the dismissal of charges.
The SEC initiated legal action against Binance and its affiliates on June 5, levying charges that Binance had offered the sale of unregistered securities and had operated illegally in the United States.
The SEC’s action against Binance came three months after the Commodity Futures Trading Commission (CFTC) had sued the exchange for failure to register with the CFTC and for multiple violations of its guidelines.
The ongoing regulatory actions against Binance have significantly impacted trading activity on its U.S. platform, Binance.US, with daily trading volumes plummeting over 98% since September 2022. On September 13, Binance.US announced the layoffs of 30% of its remaining workforce, with President and CEO Brian Shroder also departing from the company.
