The United States Securities and Exchange Commission (SEC) has stated that Binance’s motion to dismiss a lawsuit filed against it has no basis in law. The federal regulator revealed this while responding to the motion against it on Wednesday.
How the SEC vs Binance Lawsuit Started
Earlier in June, the SEC began legal proceedings against Binance. The lawsuit accused Binance of offering services to US citizens without registration, selling securities, and offering staking and profit-generating programs. The regulator also accused Binance of engaging in wash trading activities among other claims. Thereafter, Binance was given until 21 September to respond to the US SEC’s lawsuit.
In its response, Binance summarily filed a motion to dismiss the case against it by the SEC. The exchange noted there was no explicit legislation from Congress giving the SEC authority over digital assets. Thus, it claimed the SEC was overreaching and that the regulator didn’t “plausibly alleged” various securities-related violations.
SEC: Binance Has No Real Argument
In Wednesday’s filing, the SEC opened its statement by citing Binance’s Chief Compliance Officer, who allegedly admitted that Binance.US was operating without registration.
Thereafter, the regulator stated that accepting Binance’s argument would create a new “rigid framework” with no basis in existing law or legal precedents. Again, the regulator alleged that Binance’s sale of BNB during its ICO violated securities laws. It also argued that the staking and earning programs and the sale of BUSD as an investment contract also contravened federal securities law.
Meanwhile, the SEC pushed against the claim it was overreaching by extending its authority to digital assets. “Defendants fail to explain why a doctrine intended to protect Congressional authority to make major policy decisions would preclude the SEC from enforcing the Congressional policy choices embodied in the securities laws,” the SEC explained.
Reactions Trail New SEC Filing
Following the SEC’s latest filings, there have been mixed reactions, with some favoring the SEC and others supporting Binance.
Former Chief at the SEC Office of Internet Enforcement John Reed Stark believes there is no comeback for Binance after this. “The comprehensive pleading is powerful, compelling, and strongly supported in both fact and law,” he noted.
Elsewhere, Chief Legal Officer of Coinbase, Paul Grewal, faulted the SEC’s arguments about Howey and the Major Questions Doctrine. “This brief underscores why clarity from the courts is so important,” he said. Grewal also affirmed the need for Congress to pass comprehensive crypto legislation in the United States.
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