Binance CEO Zhao files court move for sec lawsuit dismissal of a significant crypto legal development
Binance CEO Changpeng “CZ” Zhao and his cryptocurrency exchange have filed a joint motion to dismiss the SEC’s case against them. Binance Holdings and Zhao both claimed in a September 21 filing in the United States District Court for the District of Columbia that the SEC had overstepped its authority in the litigation against them.
Lawyers for Binance and Zhao accused the SEC in the 60-page petition of failing to create clear guidelines for the industry before its case against the crypto exchange and, as a result, retrospectively imposing its regulatory authority throughout the crypto sector. “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.”
Binance’s lawyers also claimed that the regulator fundamentally misunderstands securities rules 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,” the complaint stated. In addition to Binance and Zhao’s appeal, the crypto exchange’s American subsidiary, Binance.US — officially known as BAM Trading Services — reportedly requested the dismissal of charges in a separate 56-page filing on the same day.
On June 5, the SEC filed a lawsuit against Binance and its affiliates, alleging that the company sells unregistered securities and operates illegally in the United States.
The SEC’s action against Binance comes three months after the CFTC sued the company for failing to register with it and violating many of its rules. The continuous regulatory action against the exchange has had a significant impact on trading activity on Binance.US, with daily trading volumes falling by more than 98% since September 2022. Binance.US fired off 30% of its remaining personnel on September 13, along with its president and CEO, Brian Shroder.
