SEC Continues Its Battle Against Binance in Regulatory Showdown

John Reed Stark, the former head of the SEC’s Office of Internet Enforcement, has highlighted the agency’s recent objections to Binance’s legal position. Citing a declaration from Binance’s Chief Compliance Officer, the opposition focuses on Binance’s purported activities as an unregistered securities exchange in the US.

Binance’s Legal Challenge Faces a Hurdle

Stark makes a suggestion in a post from November 8 that Binance could be in danger of losing the current court battle. According to the opposition, Binance has operated in the US as a clearing agency, dealer exchange, and broker, putting it in violation of federal securities laws. The paper claims that Binance deliberately chose not to comply with these rules.

The opposing paper further clarifies the specific accusations made in the lawsuit, which state that both the exchange and Changpeng Zhao, the CEO of Binance, knew they were breaking US laws. It implies that they worked out a scheme to seem as though they were not operating in the US while secretly making money off the US financial markets.

The document also exposes the behind-the-scenes operations at Binance, indicating that Zhao and the exchange had such control that employees essentially acted as puppets. Stark’s assessment of the SEC’s pleading is that it is robust, compelling, and well-supported both in fact and law.

The SEC filed lawsuits against Binance, Zhao, and Binance.US in June 2023 for allegedly offering unregistered securities (cryptocurrencies) for trade by US investors, sparking the start of the legal battle between the two parties. Since then, this litigation has grown into a larger dispute over client money access in the US.

In response to the SEC’s accusations, Binance has said that the agency has overreached itself by charging them with breaking securities laws. The ongoing battle between the SEC and Binance will have a big impact on how cryptocurrencies are regulated in the US going forward.