Crypto exchange Binance, its US arm Binance.US, and Binance CEO Changpeng “CZ” Zhao are fighting back against the US Securities and Exchange Commission (SEC) with a new court filing.
Binance And Binance CEO File Joint Motion Against SEC
On Thursday, September 21, 2023, Binance and Binance CEO Changpeng CZ Zhao filed a joint motion to dismiss the US Securities and Exchange Commission (SEC)’s lawsuit against them, including Bam Management Holdings Inc.
The filing claims that the SEC had not plausibly alleged various securities-related violations and the regulator was seeking to surround digital assets under its authority.
In the 60-page petition, Binance and Changpeng claimed that the regulator had overstepped its authority in filing a lawsuit against them. The regulator leveled a total of 13 charges in its lawsuit against the crypto exchange and its CEO Zhao, which includes mishandling customer funds, misleading investors and regulators, and breaking securities rules, among others.
Changpeng and Binance accused the regulator of failing to introduce clear guidelines for the sector ahead of its lawsuits against them thereby imposing its regulatory authority over the crypto sector retroactively.
“In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws,” lawyers for the defendants wrote. “The SEC also seeks to enlarge its jurisdiction globally to include transactions on foreign cryptocurrency platforms, defying Supreme Court precedent holding that the agency’s regulatory authority ends at the U.S. border.”
The filing also points to the that SEC Chairman Gary Gensler publicly acknowledged that “no regulatory framework” exists under the authority of the regulator for crypto exchanges in 2021, and that only “Congress” could confer that authority.
However, the regulator later reversed the course and asserted that all virtual crypto assets and all virtual crypto assets transactions are securities subject to the SEC’s authority.
In addition, Binance and Changpeng slammed the regulator saying that the regulator misuses the meaning of “investment contract” in attempts to assert its regulatory power over the crypto industry.
The filing points to the SEC’s lack of authority over the crypto industry, which led to Zhao’s move to dismiss the complaint.
SEC Is Not Yielding Anytime Soon
Recently, the SEC has grappled with a slew of pressing issues due to its several case dismissals. However, the regulator is still keen on its mission towards the crypto industry.
A few days ago, the US Securities and Exchange Commission (SEC) crypto enforcement chief David Hirsch, released a message warning the crypto industry that more punishment and charges are imminent.
“We’re going to continue to bring those charges,” This declaration leaves no room for ambiguity—the SEC is steadfast in its mission to hold the crypto industry accountable” he stated.
David made it clear in his message that the SEC is positioned to introduce new charges against the various crypto players in the crypto industry who fail to comply with proper disclosures or resignation requirements.
The regulator chief also extended his message to the Decentralized Finance (DeFi) sector. In addition, he stated that the regulatory body has not yet exhausted its arsenal when it comes to the crypto space.