22nd September 2023 – (New York) Binance CEO Changpeng “CZ” Zhao and his cryptocurrency exchange have jointly filed a motion seeking the dismissal of the lawsuit brought against them by the United States Securities and Exchange Commission (SEC). In a filing submitted to the United States District Court on 21st September, both Binance Holdings and Zhao argued that the SEC had exceeded its authority in the lawsuit.
The 60-page petition presented by Binance and Zhao’s lawyers accuses the SEC of failing to provide clear guidelines for the cryptocurrency sector before initiating legal action against the exchange. Consequently, the regulatory body retroactively asserted its authority over the crypto industry.
“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,” stated the filing.
Lawyers representing Binance also claimed that the SEC fundamentally misinterpreted securities laws and their application to crypto assets.
“In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws,” the filing read.
In addition to the joint motion filed by Binance and Zhao, Binance’s American subsidiary, Binance.US (legally known as BAM Trading Services Inc.), submitted a separate 56-page filing on the same day seeking the dismissal of the charges brought against it.
The SEC initiated the lawsuit against Binance and its affiliates on June 5, alleging that the exchange offered the sale of unregistered securities and operated unlawfully in the United States.
This legal action by the SEC followed a similar lawsuit filed three months earlier by the Commodity Futures Trading Commission (CFTC), which accused Binance of failing to register with the agency and violating its regulations.
The ongoing regulatory scrutiny has significantly impacted trading activity on Binance.US, with daily trading volumes plummeting over 98% since September 2022. As a result, on 13th September, Binance.US laid off 30% of its remaining workforce, and its president and CEO, Brian Shroder, departed from the company.ShareLike