Binance Seeks to Dismiss Expanded SEC Case

By Mark Hunter

4 weeks agoWed Nov 06 2024 09:52:31

Reading Time: 2 minutes

• Binance and Changpeng Zhao have requested the dismissal of the SEC’s amended complaint in an ongoing securities lawsuit
• Binance’s legal team has argued that the SEC’s claims lack regulatory clarity and challenge the application of existing securities law to cryptocurrency
• The SEC continues to assert that Binance violated securities laws by offering unregistered digital assets and seeks strict oversight over crypto operations

Binance and its former CEO Changpeng Zhao have filed a motion to dismiss the Security and Exchange Commission’s (SEC) expanded case against them, asserting that the SEC’s regulatory approach is flawed and overreaches its authority. This legal maneuver follows earlier dismissals by Binance, as it contests claims that its crypto assets should be classified as securities. The outcome of this case may have lasting implications for the regulatory future of cryptocurrency in the U.S.

Binance: SEC is Selectively Interpreting Laws

Binance’s defense, led by prominent legal counsel, argues that the SEC is selectively interpreting securities law to apply to cryptocurrencies without clear statutory support. They state that the SEC has exceeded its regulatory boundaries, with Binance’s lawyers referencing the “major questions doctrine,” which holds that only Congress, not federal agencies, should decide on significant issues with broad economic impact. 

The SEC’s lawsuit alleges that Binance and Zhao operated without proper licensing and marketed certain crypto tokens as securities. However, Binance contends that its digital assets, such as Binance USD (BUSD), do not meet the criteria of an investment contract under the Howey Test, which defines what qualifies as a security. According to Binance’s legal filing, “The SEC has not provided adequate grounds to classify these assets as securities, making their claim untenable.”

SEC’s Push for Regulatory Oversight

The SEC has countered Binance’s dismissal attempts, arguing that the exchange’s activities fall under U.S. securities laws due to the significant investment from U.S.-based users. The agency has insisted that Binance’s operations have knowingly bypassed regulations, with its legal team emphasizing that the platform’s internal control allowed for deceptive practices regarding compliance.

This case is scheduled for a hearing in January, where both sides will present their arguments. As this dispute unfolds, regulatory clarity in the cryptocurrency sector remains crucial, with industry experts watching closely to see if the courts will support Binance’s call for a more precise regulatory framework.