In a bold move, leading digital asset service provider Binance and its Chief Executive Officer (CEO) Changpeng ‘CZ’ Zhao have filed a motion with the United States District Court for the District of Columbia for the dismissal of the lawsuit recently brought against them by the Securities and Exchange Commission (SEC).
Binance Says Regulator is Overstepping its Boundaries
Markedly, the Binance U.S., the United States arm of the exchange which is legally known as BAM Trading Services also filed a separate motion for dismissal against the SEC. The 56-page filing was made on the same day as its parent company.
Binance Holdings and CZ strongly opine that the regulator overstepped its boundaries with the lawsuit. Specifically, the exchange explained that the SEC failed to provide concise regulation for the cryptocurrency industry, misinterpreted securities laws and retroactively imposed its authority.
Per the September 21st filing, “In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws—reading the word ‘contract’ out of the statutory phrase ‘investment contract’.”
“The SEC also seeks to enlarge its jurisdiction globally to include transactions on foreign cryptocurrency platforms, defying Supreme Court precedent holding that the agency’s regulatory authority ends at the U.S. border,” the filing reads further.
SEC Sue Binance And its Executive
The SEC sued Binance, Binance U.S. and CZ in June, accusing them of commiting about 13 crimes. According to the 136-page filing, the regulator claimed that the exchange operated unregistered US financial companies, misled investors, flouted Know-Your-Customer (KYC) rules and allowed Americans to use the platform using some form of encryption.
Noteworthy, the lawsuit came after a $1 billion complaint has been brought against Binance and some celebrities for marketing unregistered securities. The Commodity Futures Trading Commission (CFTC) also indicted Binance for violation of U.S. laws.
Binance U.S. Impacted Negatively by SEC Lawsuit
These multiple enforcement actions have impacted negatively on the activities of the cryptocurrency exchange. At one point, Binance U.S. was trying to reach an agreement with the regulator to protect its assets from being completely frozen. A significant number of employees have equally been laid off amidst these problems.
Recently, Brian Shroder, the CEO of Binance.U.S. departed the exchange and his exit lead to a number of reactions from users.