Binance and CEO CZ File Motion to Dismiss SEC Lawsuit
Binance CEO Changpeng “CZ” Zhao and the cryptocurrency exchange have jointly filed a motion to dismiss the lawsuit brought against them by the U.S. Securities and Exchange Commission (SEC). The motion, filed on September 21 with the U.S. District Court for the District of Columbia, argues that the SEC exceeded its authority in the lawsuit.
In their petition, Binance and Zhao’s legal representatives claim that the SEC failed to provide clear guidelines for the cryptocurrency sector before initiating the lawsuit. They argue that the SEC is retroactively imposing regulatory authority over the industry, distorting securities laws and seeking to expand its jurisdiction globally.
The petition also highlights that the SEC is attempting to impose liability for sales of crypto assets that occurred as far back as July 2017, before providing any public guidance on digital assets. Binance and Zhao argue that the SEC lacks authority to do this and are seeking dismissal of the complaint.
SEC vs Binance: Allegations and Ongoing Actions
The SEC initiated legal action against Binance in June, alleging that the exchange offered unregistered securities and operated unlawfully in the United States. The initial complaint also accused Binance of commingling billions of dollars of customer funds in an account controlled by Zhao.
The SEC has recently increased pressure on Binance, citing a lack of transparency. This came after a deal was struck between Binance.US and the SEC, which prevented asset freezes in exchange for greater transparency and oversight. As part of the deal, Zhao or his entities were barred from accessing funds.
Furthermore, a district judge approved the unsealing of certain documents in the SEC’s lawsuit against Binance.US earlier this month. These ongoing regulatory actions have significantly impacted trading activity at Binance.US, with daily trading volumes dropping by over 98% since September 2022.
In response to the SEC’s allegations, Binance spokesperson stated that the SEC has distorted securities laws and lacks legitimate authority over crypto exchanges. The exchange has asked the court to dismiss the SEC’s claims in their entirety.
Hot Take: Binance Pushes Back Against SEC’s Regulatory Overreach
Binance and its CEO CZ are fighting back against the SEC’s attempt to exert regulatory authority over the cryptocurrency industry. They argue that the SEC has exceeded its power by retroactively imposing rules and seeking to expand its jurisdiction globally. Binance and Zhao maintain that the SEC lacks authority over crypto exchanges and should not have initiated legal action without clear guidelines for the sector. The ongoing battle between Binance and the SEC has had significant consequences, with trading volumes plummeting at Binance.US and layoffs taking place. As the legal proceedings continue, it remains to be seen how this clash between regulators and crypto platforms will unfold.
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