Binance CEO Changpeng “CZ” Zhao and the cryptocurrency exchange he leads have jointly filed a motion to dismiss the lawsuit filed against them by the United States Securities and Exchange Commission (SEC).
This legal development unfolded in the United States District Court for the District of Columbia, with both Binance Holdings and Zhao asserting that the SEC had exceeded its jurisdiction in their lawsuit.
In a detailed 60-page petition, the legal representatives for Binance and Zhao contended that the SEC’s actions were problematic due to a lack of clear regulatory guidance within the crypto industry prior to the lawsuit.
They accused the SEC of attempting to retroactively assert its regulatory authority over cryptocurrency transactions, dating back as far as July 2017 when the SEC had yet to provide any public guidance on cryptocurrencies.
The petition stated, “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.”
READ MORE: Binance.US Faces Record-Low Trading Activity Amid Mounting Regulatory and Internal Challenges
Furthermore, Binance’s legal team argued that the SEC had misinterpreted securities laws and their applicability to crypto assets, contending that the regulator distorted the text of these laws in its pursuit of regulatory control over the crypto industry.
Notably, Binance’s American counterpart, Binance.US (legally known as BAM Trading Services), also took a similar stance by filing a separate 56-page petition on the same day, seeking the dismissal of charges.
The SEC initially filed the lawsuit against Binance and its affiliates on June 5, alleging that Binance offered the sale of unregistered securities and conducted unlawful operations within the United States.
This legal action followed a similar move by the Commodity Futures Trading Commission (CFTC), which sued Binance three months prior for failing to register and violating its regulatory guidelines.
The ongoing regulatory scrutiny has significantly impacted Binance.US, with daily trading volumes plummeting by over 98% since September 2022.
The exchange also announced layoffs amounting to 30% of its workforce on September 13, with its president and CEO, Brian Shroder, departing from the company amidst these challenges.
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