In a significant legal development, Binance CEO Changpeng “CZ” Zhao and his cryptocurrency exchange, Binance Holdings, have jointly moved to dismiss the United States Securities and Exchange Commission (SEC) lawsuit against them. This motion, filed on September 21, was submitted to the United States District Court for the District of Columbia.
The core argument presented by Binance and Zhao revolves around the alleged overreach of the SEC’s authority in their lawsuit. Their legal team, in a comprehensive 60-page petition, contends that the SEC failed to provide clear regulatory guidelines for the cryptocurrency sector prior to initiating the lawsuit. Consequently, they argue that the SEC has sought to impose its regulatory authority retroactively, a move deemed unfair and unjust.
“The SEC pursues these novel theories retroactively, seeking to impose liability for sales of crypto assets that occurred as far back as July 2017, before the SEC provided any public guidance concerning cryptocurrency,” the petition states.
Furthermore, Binance’s legal representatives assert that the SEC has fundamentally misinterpreted securities laws and their applicability to cryptocurrencies. The filing contends that the SEC’s bid to exert control over the cryptocurrency industry has led to a distortion of the text of securities laws.
Notably, Binance’s American counterpart, Binance.US (legally known as BAM Trading Services), has also sought the dismissal of charges in a separate 56-page filing on the same day. The SEC initially sued Binance and its affiliates on June 5, alleging that Binance offered the sale of unregistered securities and operated illegally within the United States.
This lawsuit by the SEC followed a similar action taken by the Commodity Futures Trading Commission (CFTC) three months prior, which accused Binance of failing to register with the CFTC and violating several of its regulatory guidelines.
The ongoing legal battles have had a substantial impact on Binance.US, with daily trading volumes plummeting by more than 98% since September 2022. On September 13, Binance.US was forced to lay off 30% of its remaining workforce, and its president and CEO, Brian Shroder, departed from the company.
The joint motion to dismiss the SEC lawsuit represents a significant development in the cryptocurrency industry’s ongoing regulatory landscape, as stakeholders closely watch the outcome of this legal battle with potential ramifications for the sector as a whole.