As part of an ongoing legal dispute, cryptocurrency exchange Binance, its U.S. affiliate, and CEO Changpeng Zhao have moved to have a lawsuit by the U.S. Securities and Exchange Commission (SEC) tossed out. This countersuit comes as the latest development in the longstanding disagreement between the exchange and American regulators.
The motion to dismiss, filed on September 21 in the District Court for the District of Columbia, accuses the SEC of overstepping its authority. Both Binance and Zhao claim that the SEC failed to provide clear regulatory guidelines for the crypto sector before launching the lawsuit, thus retroactively enforcing its authority over cryptocurrency exchanges.
The legal representatives of Binance and Zhao detailed their arguments within the 60-page document. They maintain that the SEC is trying to impose liability retroactively for crypto asset sales as far back as 2017, before any public guidance regarding cryptocurrency was in place. They further argue that the SEC lawsuit lacks any grounding in current securities laws.
The lawsuit filed by Binance also takes aim at the perceived misinterpretation of securities laws by the regulator, highlighting attempts to distort the text of securities laws to claim authority over the crypto industry.
Binance.US, a separate entity known legally as BAM Trading Services, has also requested the dismissal of related charges, via a separate 56-page filing.
Earlier this year, in June, the SEC pursued legal action against Binance and its affiliate companies, accusing them of selling unregistered securities and operating unlawfully within the U.S. This action followed the Commodity Futures Trading Commission’s lawsuit against Binance for alleged violations of registration and guidelines.
The ongoing legal issues have profoundly affected Binance.US, showing a decline in daily trading volumes by over 98% from September 2022. This led to a workforce reduction of 30% and the departure of Brian Shroder, its president and CEO.