In a recent development in the ongoing legal confrontation between Binance and the U.S. Securities and Exchange Commission (SEC), the federal regulator has countered Binance’s attempt to dismiss an SEC lawsuit, stating that the grounds for dismissal lack legal substance. The SEC responded to Binance‘s motion to dismiss the lawsuit it initiated this summer, accusing the crypto exchange of utilizing “distorted” and “tortured” interpretations of federal law and precedent.
The lawsuit, filed against Binance and Binance.US in June, shortly followed a similar action against Coinbase. The SEC contends that both companies have been offering unregistered securities to investors. In the case of Binance, the lawsuit encompasses additional allegations.
In their motion to dismiss, Binance, its U.S. arm Binance.US, and founder Changpeng Zhao (CZ) argued that the SEC’s claims were an overextension of its regulatory mandate, failing to convincingly allege actual violations of securities law. However, in its latest filing, the SEC countered that Binance‘s defense strategy seeks to undermine established legal precedents critical to the enforcement of the nation’s securities laws. The SEC accuses Binance of attempting to establish a new, rigid legal framework that has no grounding in either existing law or case precedents.
Central to the SEC’s allegations is the claim that Binance‘s sale of BNB tokens during its initial coin offering (ICO) and the sale of Binance USD (BUSD) as investment contracts constituted violations of securities law. Additionally, the SEC contends that Binance’s staking and earning programs also breach federal securities regulations.
The SEC also refuted Binance‘s invocation of the “Major Questions Doctrine,” a recent Supreme Court ruling gaining traction among crypto entities embroiled in legal challenges from federal agencies. The SEC argued that this doctrine, aimed at safeguarding Congressional authority in major policy decisions, should not be manipulated to prevent the SEC from upholding the legislative policies expressed in the securities laws.
This legal standoff between Binance and the SEC not only highlights the complexities of regulating emerging crypto markets but also underscores the challenges in defining the application of traditional securities laws to novel digital assets and investment schemes. As the case progresses, it will be closely watched for its potential implications on the broader cryptocurrency industry and regulatory landscape.
