In a bold move, Binance Holdings and its former CEO, Changpeng Zhao, are pushing back against the United States Securities and Exchange Commission (SEC). The SEC’s attempt to intertwine Binance’s $4.3 billion admission of guilt and settlement agreement with the Department of Justice (DOJ) into its ongoing legal proceedings has ignited a legal skirmish.
Binance’s Stand Against SEC’s Legal Move
In a filing dated December 12 to the U.S. District Court for the District of Columbia, Binance staunchly contested the procedural correctness of the SEC’s move. The crypto giant insisted that the SEC’s endeavor to include the DOJ settlement in their case was flawed and should be disallowed.
Origins of the Legal Battle
The roots of the Binance-SEC legal clash can be traced back to June 5, 2023, when the SEC accused Binance of 13 securities law violations. Allegations ranged from mismanagement of customer assets on Binance.US to the mixing and redirection of customer assets. The controversy escalated with the DOJ negotiating a separate settlement in November.
DOJ’s Separate Settlement
The DOJ’s separate settlement, reached in November, allowed Binance to pay a hefty $4.3 billion in penalties. Remarkably, it granted the company the ability to sustain its operations under the umbrella of U.S. regulations.
SEC’s Attempted Integration
However, the SEC aimed to intertwine the DOJ settlement into its ongoing case, contending that Binance’s admissions indicated a conscious awareness of operating within the U.S. Binance responded by asserting that the SEC failed to demonstrate the relevance of the DOJ resolutions to its initial claims against the company and Zhao.
Binance’s Legal Defense
In a statement submitted on December 12, 2023, Binance argued that the SEC’s notice lacked substance and was an impermissible attempt to introduce new factual information. The company emphasized that judicial notice should not be a replacement for amending a complaint.
Lack of Regulatory Authority?
Binance went further, asserting that the SEC’s attempt to leverage resolutions with other agencies hinted at a deficiency in the SEC’s knowledge of the appropriate regulatory authority. The company maintained that the SEC’s move reflected a lack of information rather than any merit in the regulator’s claims.
In the high-stakes legal chess match between Binance and the SEC, the crypto giant remains resolute in challenging what it deems as procedural missteps by the SEC. As the courtroom drama unfolds, the cryptocurrency community watches closely, recognizing the potential implications for the broader regulatory landscape.
