Binance and CZ Strike Back
In an unprecedented defiance against the U.S. Securities and Exchange Commission (SEC), Binance, the largest cryptocurrency exchange worldwide, and its ex-CEO, Changpeng “CZ” Zhao, have filed opposition to requests intended to protect its operations and reputation. A legal team representing Binance and CZ has since moved to dismiss the SEC’s amended complaint in the District Court of Columbia. The claims by regulators concern alleged violations of securities law in connection with cryptocurrency traded on its platform.
Key Highlights of the Case
Dismiss SEC’s Assertions: Binance and CZ requested the Court to dismiss SEC’s claims as inconsistent with a previous ruling.
The problem with the SEC, according to Binance: is a state of confusion in the crypto market due to a lack of clear regulatory systems.
Continued Legal Trouble: In addition to the SEC, Binance has also battled the DOJ, incurred massive fines, and seen changes in its leadership.
In Any Case, The Heart Of Binance And Its Affiliation
The lawyers for Binance and CZ claim in their court filing that the SEC is contradicting itself and ignoring prior court rulings on the nature of crypto assets. In particular, they refer to a precedent in which a court in the U.S. ruled that crypto assets should not be treated as securities by default. The significance here is that the SEC loses legal basis for many of its claims if cryptocurrency transactions are not classified as securities.
The Binance team further points out that the classification of resale of digital assets (such as tokens or digital coins) as a securities transaction is also erroneous because this does not in itself represent such a transaction. Binance noted its legal departments view the SEC’s definition to be overly broad and detrimental to digital assets, if utilised against exchanges, investors, and the burgeoning digital economy.
The SEC is under scrutiny for its regulatory stance.
Despite some aggressive moves made by the SEC recently against crypto regulation under Chair Gary Gensler, Binance lawyers claim that the SEC is simply sowing confusion—not clarity. In response, the exchange’s attorneys slammed the SEC’s approach, stating that the regulatory agency is “arbitrarily choosing winners and losers” in the crypto industry.
A recent example would be the SEC claiming that transactions on Ethereum may be considered securities while Binance’s legal team finds the arbitrariness perplexing. They’re calling for more precise delineations on which crypto transactions the SEC considers securities, arguing that the SEC’s grey areas are causing frivolous lawsuits.
Order from Judge Amy Berman Jackson
A few weeks ago, Judge Amy Berman Jackson threw out some SEC allegations against Binance. Third, the Judge also shot down the SEC’s arguments that trading in secondary markets Binance Coin (BNB) is illegal and that the dynamic selling of Binance USD (BUSD), a stablecoin, constitutes securities transactions. The ruling also provided the exchange with more leverage to contest the SEC’s amended complaint.
For Binance, the rejection of these particular allegations is a slight victory. That follows a claim from the SEC that not all cryptocurrency transactions are subject to securities regulation under its purview.
Binance’s Legal Tussles: More Than Just the SEC
XRP: SEC Not the Only Regulator Taking Binance Step On XRP, Part of Strike Team Looking To Toe the Line Tuesday, October 10, 2023 by poltuf from poltur 4,425 followers SEC Is Not The Only Regulator Having Issues With Binance In the second half of 2023, the DOJ imposed significant consequences that included separate criminal charges against CZ and Binance Holdings. The exchange confessed to breaching anti-money laundering (AML) laws and executing money transmission without a license. This resulted in Binance being slapped with a $4.3 billion fine and CZ serving four months in a U.S. slammer, from which he gained his freedom earlier this year.
CZ stepped down as leader of Binance in November 2023 to hand the CEOship to Richard Teng. And under Teng, who has been toiling away at the top of the org chart for the past months, Binance has already been inching toward clearing regulatory hurdles and complying with existing regulation in the world of unnecessary financial garb. His position has helped guide the exchange closer to stability.
What Lies Ahead for Binance?
These court challenges are symptomatic of the regulatory hurdles major cryptocurrency exchanges around the world must overcome. However, Binance’s pushback against the SEC raises eyebrows as it poses regulatory implications in the U.S. and legal analysts have the case on their radar as it could impact how crypto assets will be regulated at all.
Binance’s lawyers, meanwhile, are standing firm against what it sees as the overreach of the SEC and saying regulators need to pay attention to harmonising guidelines. Much of the defence that the exchange will mount is based around the argument that digital assets should not be automatically considered securities, a point that could set a precedent for future policies.
