SEC crosses the line: CZ and Binance ask for proceedings to be dropped

Recently, the CEO of Binance stepped up to defend his highly popular cryptocurrency exchange. According to the latest news, Changpeng Zhao, aided by Binance.US lawyers, has asked the court to dismiss the US SEC’s lawsuits. Let’s break it down!

In brief

• CZ and Binance have jointly filed a request asking the court to dismiss the SEC’s lawsuits against him and his crypto exchange.
• According to the document, the Securities and Exchange Commission (SEC) has crossed the line as a cryptocurrency market regulator.

Binance and CZ join forces against the SEC

Faced with an increasingly aggressive SEC against Binance, US-based crypto exchanges, DeFi, and the entire cryptocurrency industry, CZ and his team are not backing down.

Recently, the CEO of Binance made a revealing statement that may change the dynamics of the case between the US branch of his crypto empire (Binance US) and the financial watchdog. In a tweet, he clarified that Binance US had never dealt with Ceffu or Binance Custody.

Binance Holdings and its CEO @cz_binance have filed a petition seeking to have the lawsuit made against them by the US Securities and Exchange Commission (SEC) dismissed. https://t.co/VsF0zd13O9

— Cointelegraph (@Cointelegraph) September 22, 2023

“Binance Holdings and its CEO CZ have filed a petition requesting that the lawsuits brought against them by the United States Securities and Exchange Commission (SEC) be dismissed.”

In Cointelegraph‘s columns, we found several details regarding the development of the Binance vs. SEC case. The 60-page document filed on September 21 with the United States District Court highlights two distinct requests:

• The dismissal of the lawsuits filed by Gary Gensler and his team against Changpeng Zhao and Binance Holdings.
• Clarification of an abuse of power by the SEC in the ongoing case against him and his crypto exchange.

The petition also mentions a failure to provide clear guidance by the crypto regulator. CZ and Binance believe that the US SEC should have clarified certain matters before taking the cryptocurrency exchange to court.

By acting in this manner, any anti-crypto legal action by the SEC would resemble retroactive regulatory authority abuse.

“The SEC pursues these novel theories retroactively, seeking to impose liability for cryptocurrency sales that occurred as early as July 2017, before the SEC provided any public guidance concerning cryptocurrencies,” the filing reads.

Binance cites an issue of law interpretation

Binance and CZ, victims of an arbitrary attack since early June, have shown no signs of weakness in the face of the SEC. When the crypto regulator brought forth a list of 13 charges against the CEO and his cryptocurrency exchange, Binance, the issuer of BNB, used all its legal and communication tools to balance the power dynamic.

In the recently filed document with the court, Binance’s lawyers, who have already submitted several counterattack requests, did not spare the SEC. According to them, this US institution misinterpreted the foundations of securities laws and even applied them incorrectly to cryptocurrencies.

“In seeking to assert regulatory authority over the cryptocurrency industry, the SEC distorts the text of the securities laws,” they continued in the petition.

It’s worth noting that BAM Trading Services Inc (Binance US) filed a similar document yesterday. It also includes a request for the SEC’s lawsuits to be dropped.

Currently, almost all US regulators—Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Department of Justice (DoJ)—are taking action against Binance.com. The issue is that Binance failed to register with these institutions as a cryptocurrency exchange. Note that Binance’s regulatory challenges have resulted in a significant drop in bitcoin (BTC) transaction volume.