Changpeng Zhao, the CEO of Binance, and the cryptocurrency exchange itself have jointly filed a motion seeking the dismissal of the lawsuit brought against them by the US Securities and Exchange Commission (SEC). Filed in the US District Court for the District of Columbia on September 21, the motion argues that the SEC overstepped its authority in the lawsuit.
In their 60-page petition, lawyers representing Binance and Zhao contend that the SEC has retroactively imposed sanctions on the cryptocurrency industry. They argue that the SEC failed to provide clear industry guidelines before initiating lawsuits against cryptocurrency exchanges, effectively creating regulations after the fact. The petition states, "The SEC is retroactively pursuing these novel theories in an attempt to establish liability for crypto asset sales that occurred as early as July 2017, before the SEC provided public guidance regarding cryptocurrencies."
The filing asserts that the SEC's lawsuit lacks a basis in current securities laws. Binance's legal team also claims that regulators have a fundamental misunderstanding of securities laws and their application to crypto-assets. They accuse the SEC of misrepresenting the text of securities laws in its attempt to exert regulatory authority over the cryptocurrency industry.
Additionally, Binance's US affiliate, Binance.US (officially known as BAM Trading Services), has reportedly filed a separate 56-page document seeking the dismissal of charges on the same day. The SEC initiated legal action against Binance and its affiliates in June, alleging that Binance had sold unregistered securities and was operating unlawfully in the United States.
This legal battle comes after the US Commodity Futures Trading Commission (CFTC) also sued Binance for failing to register with the agency and for multiple violations of its regulations. Binance.US has faced significant challenges, with daily trading volumes plummeting by more than 98% since September 2022. In September 2023, the exchange laid off 30% of its remaining staff, and its President and CEO, Brian Shroder, departed the company.
