Binance and CZ Fight Back, Seek SEC’s Lawsuit Dismissal

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As a seasoned crypto investor with a decade of experience under my belt, I must say that the ongoing legal tussle between Binance and the SEC is a rollercoaster ride that none of us expected. Having witnessed the meteoric rise of Binance from a small startup to the world’s largest crypto exchange in trading volume, it’s disheartening to see such a significant player grappling with regulatory issues.

Binance‘s legal team, along with its former CEO Changpeng “CZ” Zhao, have submitted a new request in a court in the District of Columbia. In this joint submission, their lawyers ask for the dismissal of the revised charges against Binance and CZ, who are named as defendants. Previously, the Securities and Exchange Commission (SEC) had filed a revised lawsuit against them.

Binance Legal Team Attacks SEC’s Inconsistency

In their argument, Binance and CZ’s legal team claim that a recent amendment in the complaint from the regulatory authority conflicts with a previous court decision. They believe that since a US court previously determined that cryptocurrencies are not considered securities, the SEC should abide by this verdict and its consequences. Essentially, they argue that selling assets well after their initial distribution by developers does not automatically constitute “securities” trades.

In a counterargument, the lawyers are challenging the SEC’s revised lawsuit claim, where they persistently argue that any dealings related to cryptocurrency assets should be categorized as securities trades. Importantly, in their submission to the court, the SEC has asserted that crypto activities such as the resale of tokens on secondary markets are also considered securities transactions.

In her decision, Judge Amy Berman Jackson dismissed certain aspects of the Securities and Exchange Commission (SEC) lawsuit against Binance. Specifically, she rejected the SEC’s allegations that Binance’s native token, BNB, is being unlawfully traded on secondary markets. Additionally, Judge Berman tossed out claims related to the sale of Binance USD stablecoin by the SEC.

Binance and CZ’s legal team argue that the Securities and Exchange Commission (SEC) should provide more regulatory clarity regarding virtual assets. Their attorneys challenge the SEC for not clearly defining which crypto asset transactions constitute investment contracts and which do not. They propose that the SEC should openly state, either in court or to market participants, the standard rules and classifications for these assets.

The defense attorneys pointed out a recent argument stating that Ethereum transactions equate to investment contracts. In their view, the regulatory body is unfairly favoring some participants over others by making decisions based on subjective judgement, which they consider detrimental to the industry.

Any End to Binance’s Legal Tussles?

Since June 2023, Binance and its founder have found themselves embroiled in a legal dispute with the Securities and Exchange Commission (SEC). Unlike the criminal accusations leveled against the previous CEO and Binance Holdings by the Department of Justice, this matter is distinct.

In this scenario, it’s important to note that Binance, currently the world’s leading cryptocurrency exchange by trading volume, acknowledged breaching anti-money laundering regulations and engaging in unauthorized money transactions. As a result, the court imposed a penalty of approximately $4.3 billion on Binance. Changpeng Zhao, commonly known as CZ, served a four-month prison sentence in the United States for these offenses. However, CZ has since completed his term of imprisonment.

Legal professionals are excited to see how the ongoing legal dispute will play out over the next few months. Some believe that Binance, under the guidance of Richard Teng as its new CEO since November 2023 (following Changpeng Zhao’s guilty plea to criminal charges), has been successful in navigating regulatory challenges.

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2024-11-05 14:36