Binance, Binance.US, and Changpeng Zhao (CZ) have moved to dismiss a lawsuit from the U.S. Securities and Exchange Commission (SEC), arguing that the regulator has not convincingly alleged certain securities-related breaches. They further contend that the SEC is attempting to bring digital assets under its supervision, even though U.S. Congress has not clearly defined such a directive. In June, the SEC initiated legal action against the Binance Group.
In its complaint, the SEC accuses Binance, CZ, and Binance.US of unlawfully offering unregistered securities in the guise of various cryptocurrencies to U.S. investors.
This lawsuit immediately sparked a legal debate regarding the accessibility of funds held by Binance.US customers. In the recent submissions, legal representatives for Binance and Binance.US asserted that the SEC’s claims of securities law infringements were excessive.
One of the documents of the filings stated, “The SEC has recently initiated multiple enforcement actions, including the current one, based on its revised stance that nearly all cryptocurrencies and their transactions fall under the category of securities.” The filing further argued that the SEC’s interpretation of “investment contract” was overly expansive.
The filings also highlighted arguments related to the “major questions doctrine,” a Supreme Court decision that mandates federal agencies to seek Congressional approval on pivotal economic or political matters.
The “Congress has considered more than a dozen proposals that would provide a coherent and workable framework for crypto assets and their trading platforms,” the filing said. Importantly, none of these proposals suggest granting the SEC exclusive regulatory control over the cryptocurrency sector.
Yet, the SEC is attempting to broaden its jurisdiction by launching this lawsuit against entities, including Binance Holdings Limited and Changpeng Zhao. However, this line of argument has led to differing opinions in the judiciary. Some judges believe that it is Congress’s responsibility to elucidate the regulatory approach towards digital assets. In contrast, others opine that cryptocurrencies do not hold sufficient importance to warrant the application of the doctrine.
The battle between regulators and the crypto industry over the right way to monitor it will likely be with us intensely for the next few months. Until then, the entire crypto lives under uncertainty, which will not positively impact sentiment.
