Binance and its CEO Changpeng “CZ” Zhao have jointly filed a motion to throw out the case brought against them by the U.S. Securities and Exchange Commission (SEC).
Binance Seeks Dismissal Of SEC Charges
Binance CEO CZ and the cryptocurrency exchange itself have asked the court to dismiss the SEC lawsuit.
In a September 21 filing with the U.S. District Court for the District of Columbia, both Binance Holdings and Changpeng Zhao argued that the American regulator had overreached its authority in the suit.
According to the 60-page motion, the attorneys for Binance and Zhao accused the SEC of failing to provide a clear framework for the crypto industry before launching the complaint against the global digital asset exchange. As such, they claimed that the top regulatory agency was trying to impose its regulatory control over the nascent crypto sector retroactively.
“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.”
As the SEC lacks authority to do this, Binance Holdings Limited and Zhao strive to have the case dismissed.
Binance’s legal team also contended that Wall Street’s biggest regulator fundamentally misconstrues securities laws and their application to crypto assets.
“In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws,” read the petition.
“And the SEC’s wash trading allegations, while sensationalized with labels, are unsubstantiated with facts. Accordingly, the Complaint should be dismissed,” the attorneys added.
The SEC Lawsuit
The SEC hit Binance, Zhao, and Binance.US with a hefty lawsuit in June, alleging they illegally listed unregistered securities in the form of several crypto assets for trading and investment by American investors. In its initial complaint, the SEC also alleged billions of dollars of client funds “were commingled in an account” that belonged to an entity, Merit Peak, which CZ manages.
A federal magistrate judge recently denied the SEC’s request to access the software powering Binance.US.
That being said, the ongoing legal action has considerably affected trading activities at Binance.US. Notably, trading volumes at the exchange have plummeted by over 98% since September 2022.
Moreover, Binance.US trimmed 30% of its workforce last week, with its president and CEO Brian Shroder also exiting the company.