Binance argues SEC trampled authority set by Congress
Binance, Binance.US, and Changpeng Zhao have jointly filed to dismiss a lawsuit brought by the Securities and Exchange Commission (SEC) in June.
They argue that the SEC has not “plausibly alleged” securities-related violations and is attempting to extend its authority over digital assets without explicit congressional backing. The SEC’s lawsuit accuses the entities of listing unregistered securities in the form of cryptocurrencies for U.S. investors, sparking a legal battle over access to Binance.US customer funds.
The lawyers argue that the world’s largest cryptocurrency exchange does not offer securities and, as a result, the agency lacks jurisdiction to regulate its business. Additionally, they claim that the SEC’s actions have violated due process, abused its discretion, and deviated from its own previous interpretations of the securities laws.
Binance argues that SEC has trampled the strict boundaries on its basic authority set by Congress.
“Indeed, since 2019, Congress has considered more than a dozen proposals that would provide a coherent and workable framework for crypto assets and their trading platforms. Critically, none of those proposals would confer sole regulatory jurisdiction over the crypto industry to the SEC. Despite this, the SEC now seeks to expand its authority and filed this lawsuit, asserting claims against Binance Holdings Limited (‘BHL’) and Changpeng Zhao, among others,” reads the filing.
Earlier this month, the US affiliate of Binance filed a motion for a court order to protect itself against an inappropriate “fishing expedition” by the SEC. Binance’s protective order seeks to set limits on the number of employees the SEC can question, excluding key figures like CEO Changpeng “CZ” Zhao, claiming that its senior executives “do not have unique firsthand knowledge about the facts surrounding the security, custody, and transfer of customer assets.”
The order would also restrict the scope of questioning to matters directly related to the consent order and prevent requests for communications about topics other than customer assets.
Back in June, the U.S. arm of Binance, which operates under BAM Trading Services and BAM Management US Holdings, agreed to a consent order with the SEC after the agency sought to freeze all of its assets. However, according to the recent filing, Binance alleges that the SEC’s discovery requests go way beyond what was agreed upon and argues that its demands are not relevant to the probe.