Binance and CEO CZ Zhao are fighting an overreaching SEC lawsuit and want it dismissed
Binance.US adopted a similar stand and filed its own 56-page petition on the same day.
The United States Securities and Exchange Commission (SEC) has launched a lawsuit against Binance and its CEO, Changpeng “CZ” Zhao. Binance and its CEO have jointly filed a petition to dismiss the action.
Both Binance Holdings and Zhao claimed that the SEC’s case was outside of the agency’s purview as they fought the SEC in the United States District Court for the District of Columbia.
Binance and Zhao’s lawyers filed a 60-page petition arguing that the SEC’s actions were problematic since the cryptocurrency market lacked clear regulatory guidelines prior to the case.
Even though the SEC hadn’t issued any public guidelines on cryptocurrencies at the time, they were accused of trying to retrospectively establish regulatory jurisdiction over crypto transactions as early as July 2017.
It was noted in the petition that the SEC “pursues these novel theories retroactively, seeking to impose liability for sales of crypto assets as far back as July 2017,” which was before the SEC issued any public advice about cryptocurrencies.
To use the SEC’s own words: “It is clear that the SEC’s lawsuit has no foundation in the currently enacted securities laws.”
Binance’s legal team also claimed that the SEC misrepresented the meaning of securities laws in its attempt to exert regulatory control over the cryptocurrency business, arguing that the regulations do not apply to cryptocurrencies.
Binance’s American equivalent, Binance.US (officially known as BAM Trading Services), adopted the same stand and filed a second 56-page appeal on the same day asking for the allegations against it to be dropped.
On June 5, the SEC originally filed a complaint against Binance and its affiliates, saying that Binance had proposed the sale of unregistered securities and had engaged in illegal activities inside the United States.
After being sued by the CFTC for failing to register and breaching its regulatory rules three months earlier, Binance was subject to similar legal action.
Since September 2022, when governmental monitoring began, Binance.US has seen a precipitous drop in daily trade volumes of over 98%.
Along with the departure of president and CEO Brian Shroder, the exchange announced layoffs of 30% of its personnel on September 13.