Binance and CEO Zhao Contest SEC’s Regulatory Aspirations and File for Dismissal

Binance, its U.S. counterpart Binance.US, and their CEO, Changpeng Zhao, recently filed a motion to dismiss a lawsuit from the U.S. Securities and Exchange Commission (SEC). They argue that the SEC hasn’t sufficiently proven that there were any securities-related violations. The central issue? The SEC’s desire to bring digital assets under its regulatory umbrella, despite the lack of clear guidelines from Congress on this matter.

The SEC initiated a lawsuit against Binance, Binance.US, and Zhao in June. They accused the entities of listing cryptocurrencies for trade and investment without proper registration. This claim stirred debates over Binance.US customer funds access rights. Binance’s legal representatives, in their recent filing, highlighted the SEC’s overstepping boundaries by claiming breaches in securities laws.

One notable point in the filings was the mention of the SEC’s aggressive stance on cryptocurrencies. The regulator seems to view nearly all crypto assets and transactions as securities. This approach, Binance’s attorneys argue, expands the definition of “investment contract” excessively.

Furthermore, the filings touched upon the “major questions doctrine.” This is a guideline set by the Supreme Court, emphasizing that federal agencies should hold off on making decisions on significant economic or political matters until Congress gives a clear directive.

Interestingly, Congress has deliberated on crypto regulations since 2019. They’ve looked at numerous proposals aimed at establishing a clear framework for crypto assets and trading platforms. However, none of these discussions have granted the SEC exclusive regulatory control over the cryptocurrency sector. Even so, the SEC seems eager to increase its influence, as evidenced by the lawsuit against Binance Holdings Limited (BHL) and Changpeng Zhao, among others.

Last week, Binance.US already called a number of the SEC’s demands “unreasonable” and “unduly burdensome.”