Binance's U.S. arm asked district court in Washington, D.C. to dismiss a case brought by the Securities and Exchange Commission (SEC), arguing that the SEC's allegations of wash trading lack factual substantiation.
The SEC had accused Binance.US, along with #Binance Holdings Limited and BAM, of misrepresenting measures to prevent market manipulation and allowing wash trading via Sigma Chain, an undisclosed "market making" trading firm owned by Binance CEO Changpeng Zhao.
In their motion to dismiss, lawyers representing Binance Holdings Limited and BAM stated that the SEC's complaint lacks specific allegations regarding Sigma Chain's alleged misconduct, relying instead on conclusory allegations and isolated instances of interaction with Sigma Chain accounts. Wash trading, under securities laws, requires fraudulent intent to manipulate the market, which the SEC failed to demonstrate.
The motion also addressed the SEC's classification of certain tokens offered on the platform as securities, including $BNB $BUSD $SOL ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI. BAM's lawyers highlighted that the SEC did not allege that buyers of these digital assets were promised any future value by the sellers or anyone else, challenging the classification of these tokens as securities.
Furthermore, the lawyers invoked the major questions, asserting that the SEC lacks the authority to regulate digital assets as securities without clear congressional authorization. They contended that even if the SEC plausibly argued that transactions involving the digital assets were investment contracts (which they claim the SEC has not done), the major questions doctrine would necessitate dismissal.
