Binance and Binance.US are contesting an SEC lawsuit, citing regulatory overreach and unclear crypto guidelines, impacting trading volumes and operational stability.
- Binance, Binance.US, and Changpeng Zhao file a motion to dismiss the SEC lawsuit, emphasizing regulatory overreach and unclear guidelines.
- SEC accuses the defendants of listing unregistered securities, affecting U.S. investors and raising concerns regarding customer funds.
- Binance.US experiences significant impacts due to ongoing regulatory actions, with substantial drops in trading volumes and layoffs.
Binance, Binance.US, and Changpeng Zhao have filed a motion to dismiss the lawsuit brought against them by the United States Securities and Exchange Commission (SEC).
The defendants argue that the SEC exceeded its regulatory jurisdiction by filing the lawsuit without clear guidelines for the cryptocurrency sector.
— Pushpendra Singh Digital (@PushpendraTech) September 22, 2023
The SEC’s Accusations
The SEC’s lawsuit accuses Binance, Zhao, and Binance.US of listing unregistered securities in the form of various cryptocurrencies for trading and investment by U.S. investors. This legal battle also raises concerns about the accessibility of customer funds on Binance.US.
In their motion to dismiss, Binance and Zhao argue that the SEC has expanded its definition of “investment contract” to include a wide range of crypto assets and transactions.
They believe the SEC’s interpretation of securities laws and their application to cryptocurrencies is flawed. The defendants emphasize that the SEC’s lawsuit seeks to hold them accountable for crypto asset sales dating back to 2017, despite the lack of clear regulatory guidance at that time.
SEC Accused of Overreaching
Binance and Zhao point out that Congress has considered 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 argue that the SEC is overreaching in its pursuit of regulatory control over the crypto sector.
Binance.US, also known as BAM Trading Services Inc., has filed a separate motion to dismiss the charges against it.
The ongoing regulatory actions, including the SEC lawsuit, have heavily impacted trading activity on Binance.US, with daily trading volumes plummeting by over 98% since September 2022.
Additionally, Binance.US has laid off 30% of its workforce and experienced the departure of its president and CEO, Brian Shroder.
This legal battle between Binance, Binance.US, and Changpeng Zhao against the SEC raises important questions about regulatory jurisdiction and the need for clear guidelines in the cryptocurrency sector.
The outcome of this lawsuit will have significant implications for the future of cryptocurrency regulation in the United States.