Binance Holdings, its U.S. counterpart, and CEO Changpeng Zhao have filed motions seeking the dismissal of a lawsuit against them by the SEC.
Binance CEO Changpeng “CZ” Zhao and his cryptocurrency exchange have filed a joint motion to dismiss the United States Securities and Exchange Commission (SEC) lawsuit against them.
According to a Sept. 21 filing in the United States District Court for the District of Columbia, both Binance Holdings and Zhao claimed that the SEC had overstepped its authority in the lawsuit against them.
In the 60-page petition, lawyers for Binance and Zhao accused the SEC of failing to introduce clear guidelines for the sector ahead of its lawsuit against the crypto exchange and, as a result, had imposed its regulatory authority over the crypto sector retroactively.
“The SEC pursues these novel theories retroactively, seeking to impose liability for sales of crypto assets that occurred as far back as July 2017, before the SEC provided any public guidance concerning cryptocurrency.“
“It is clear that the SEC’s lawsuit has no foundation in the currently enacted securities laws.“
Lawyers for Binance also asserted that the regulator fundamentally misinterprets securities laws and their application to crypto assets.
“In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws,” read the filing.
In addition to Binance and Zhao’s petition, the American outfit of the crypto exchange, Binance.US — legally known as BAM Trading Services — also reportedly sought the dismissal of charges in a separate 56-page filing made on the same day.
The SEC sued Binance and its affiliates on June 5, pressing charges claiming Binance offers the sale of unregistered securities and operates illegally in the United States.
The SEC’s move against Binance came three months after the Commodity Futures Trading Commission (CFTC) also sued Binance for failing to register with it and for breaking many of its guidelines.
Trading activity on Binance.US has been hit hard by the ongoing regulatory action against the exchange, with daily trading volumes slumping more than 98% from Sept. 2022. On Sept. 13, Binance.US laid off 30% of its remaining workforce, with its president and CEO Brian Shroder also departing the firm.