Binance, Binance.US, and Changpeng Zhao File Motion to Dismiss SEC Lawsuit
Binance, Binance.US, and Changpeng Zhao have collectively submitted a motion to dismiss the lawsuit brought against them by the United States Securities and Exchange Commission (SEC). In their 60-page petition filed on September 21, they argue that the SEC overstepped its regulatory boundaries by initiating legal action without clear guidelines for the cryptocurrency industry. The defendants claim that the SEC retroactively imposed its authority. The SEC’s lawsuit accuses Binance, Zhao, and Binance.US of offering unregistered securities in various cryptocurrencies to US investors. This legal battle has also sparked a dispute over access to Binance.US customer funds.
Binance Challenges SEC’s Expanded Definition of “Investment Contract”
A key argument in the motion to dismiss is that the SEC has broadened its definition of an “investment contract” to encompass a wide range of crypto assets and transactions. Binance and Zhao’s legal team asserts that the SEC’s interpretation of securities laws in relation to cryptocurrencies is fundamentally flawed. They highlight that the lawsuit seeks to hold Binance accountable for sales dating back to July 2017, despite the absence of regulatory guidance at that time. The petition suggests that the SEC’s case lacks a solid foundation within existing securities laws.
SEC Accused of Overreaching in Crypto Regulation
Binance and Zhao argue that Congress has reviewed multiple proposals since 2019 to establish a comprehensive framework for cryptocurrencies and trading platforms. None of these proposals grant exclusive regulatory authority over the crypto industry to the SEC. Therefore, they claim that the SEC is exceeding its jurisdiction in attempting to regulate the sector. On the same day, Binance.US also filed a separate motion seeking dismissal of charges against it. The ongoing regulatory actions against Binance, including the SEC lawsuit, have significantly impacted trading activity on Binance.US, with daily volumes dropping by over 98% since September 2022.
Hot Take: Binance and Zhao Fight Back Against SEC’s Lawsuit
Binance, Binance.US, and Changpeng Zhao have responded to the SEC’s lawsuit with a motion to dismiss, arguing that the regulatory authority overstepped its boundaries. They claim that the SEC lacked clear guidelines for the crypto industry before taking legal action and retroactively imposed its authority. The defendants challenge the SEC’s expanded definition of an “investment contract” and argue that the lawsuit lacks a solid foundation within existing securities laws. Binance and Zhao also contend that the SEC is overreaching in its attempts to regulate the crypto sector, as Congress has not granted exclusive regulatory authority to the SEC. The ongoing legal actions have had a significant impact on trading activity on Binance.US.
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