Binance and its CEO, Changpeng Zhao, have filed a motion to dismiss the lawsuit filed against them by the United States Securities and Exchange Commission (SEC). The motion argues that the SEC has exceeded its jurisdiction and that there was a lack of regulatory guidance within the crypto industry prior to the lawsuit. Binance’s American counterpart, Binance.US, has also filed a similar petition seeking the dismissal of charges.
In their motion, Binance and Zhao contend that the SEC is attempting to retroactively assert its regulatory authority over cryptocurrency transactions dating back to July 2017, before the SEC provided any public guidance on cryptocurrencies. They argue that the SEC’s lawsuit has no foundation in currently enacted securities laws.
The legal team representing Binance and Zhao further argues that the SEC has misinterpreted securities laws and their applicability to crypto assets. They claim that the regulator has distorted the text of these laws in its pursuit of regulatory control over the crypto industry.
The SEC filed the lawsuit against Binance and its affiliates on June 5, alleging that Binance offered the sale of unregistered securities and conducted unlawful operations within the United States. This legal action followed a similar move by the Commodity Futures Trading Commission (CFTC), which sued Binance three months prior for failing to register and violating its regulatory guidelines.
The ongoing regulatory scrutiny has had a significant impact on Binance.US, with daily trading volumes plummeting by over 98% since September 2022. The exchange has also announced layoffs amounting to 30% of its workforce and its president and CEO, Brian Shroder, has departed from the company amidst these challenges.
It remains to be seen how the court will respond to Binance and Zhao’s motion to dismiss the SEC’s lawsuit. The outcome of this case could have implications for the broader crypto industry and the regulatory environment surrounding it.
In the meantime, Binance and Binance.US continue to face regulatory challenges and must navigate the legal landscape to ensure compliance with existing laws and regulations. The outcome of these lawsuits will shape the future of crypto regulation in the United States and could set a precedent for how other countries approach the industry.
