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Binance Holdings, its U.S. branch, and CEO Changpeng Zhao have asked a court to throw out a lawsuit filed against them by the SEC.
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On Thursday, September 21, 2023, Binance filed a request to dismiss the U.S. Securities and Exchange Commission’s (SEC) claims against the company and its co-founder, Changpeng Zhao (CZ). Binance argued that the SEC’s claims lack a basis in current securities laws, especially considering ongoing discussions among lawmakers about the crypto asset ecosystem.
No Enforcement Guidance Yet
In their legal filing, Binance Holdings Limited and CZ made an important point. They argued that the SEC is trying to hold them responsible for selling tokens dating all the way back to 2017, even though the SEC hasn’t provided clear guidance on such transactions. They believe the SEC doesn’t have the authority to take action in this case.
Additionally, the crypto exchange argued that the SEC’s claims don’t meet the requirements of the Howey Test, which is a legal standard used to determine if something is an investment contract. According to the exchange, there should be a legal relationship between the user and the platform for the Howey Test to apply.
The SEC’s lawsuit alleges that the exchange violated U.S. securities law by not registering certain crypto products and assets they offered.
The defendants argue that the SEC is trying to gain control over the cryptocurrency industry by interpreting securities laws in a way that changes the meaning of “investment contract.” They also claim that the SEC wants to expand its authority beyond U.S. borders to cover transactions on foreign cryptocurrency platforms.
The defendants believe that only the U.S. Congress has the authority to make decisions about policies like the ones the SEC is trying to change regarding what qualifies as an investment contract.
Request to Dismiss SEC Allegations
The defendants are asking the court to throw out all of the SEC’s claims because, in their view, the SEC hasn’t provided enough evidence to convincingly prove that any of the cryptocurrencies in question should be considered securities. Binance also argues that the SEC oversteps its authority by saying that foreign platforms must register in the U.S. just because American citizens can access them online.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
