Binance CEO Changpeng “CZ” Zhao and the cryptocurrency trade itself have collectively filed a movement to dismiss the lawsuit introduced in opposition to them by the U.S. Securities and Trade Fee (SEC).
In a September 21 filing with the U.S. District Court docket for the District of Columbia, each Binance Holdings and Zhao contended that the SEC had exceeded its authority within the lawsuit.
Within the 60-page petition, the authorized representatives for Binance and Zhao accused the SEC of failing to supply clear pointers for the cryptocurrency sector earlier than initiating the lawsuit in opposition to the crypto trade. In consequence, they argued that the SEC was making an attempt to retroactively impose its regulatory authority over the crypto business.
“In making an attempt to say regulatory energy over the crypto business, the SEC distorts the textual content of the securities legal guidelines—studying the phrase ‘contract’ out of the statutory phrase ‘funding contract’,” reads the submitting. “The SEC additionally seeks to enlarge its jurisdiction globally to incorporate transactions on international cryptocurrency platforms, defying Supreme Court docket precedent holding that the company’s regulatory authority ends on the U.S. border.”
The petition additional acknowledged that “the SEC pursues these novel theories retroactively, looking for to impose legal responsibility for gross sales of crypto property that occurred way back to July 2017,” earlier than it truly supplied any public steering regarding digital property.
Because the SEC lacks authority to do that, Binance Holdings Restricted and Zhao search to dismiss the grievance.
The checklist of defendants additionally contains BAM Buying and selling Providers, the American subsidiary of the corporate, which is working the Binance.US trade.
Decrypt has reached out to Binance for remark and can replace this story ought to the trade reply.
SEC vs Binance
The SEC initiated authorized motion in opposition to Binance and its associates in June, alleging that Binance was providing the sale of unregistered securities and working unlawfully in the USA.
In its preliminary grievance, the SEC additionally alleged billions of {dollars} of buyer funds “have been commingled in an account” that belonged to Merit Peak, an entity managed by Zhao. A day after the lawsuit was filed, the SEC sought an emergency order freezing Binance US’s property to make sure buyer funds’ security.
The SEC stepped up strain on Binance in current weeks, accusing the crypto trade of a “lack of transparency.” The transfer got here within the wake of a deal that was struck between Binance.US and the SEC, stopping a freeze in trade for higher transparency and oversight. A stipulation of the deal included that Zhao or any entities he owns or controls don’t have entry to the funds.
Moreover, a district decide approved earlier this month the SEC’s movement to unseal sure paperwork in its lawsuit in opposition to Binance.US
The continued regulatory actions have had a considerable impression on buying and selling exercise at Binance.US, with each day buying and selling volumes plummeting by greater than 98% since September 2022.
On September 13, a new round of layoffs at Binance.US noticed the trade shed round a 3rd of its workforce, accompanied by the departure of its president and CEO, Brian Shroder.