In a filing made on Wednesday, the SEC challenged Binance's and Binance.US's bid to have the lawsuit it filed against them earlier in the summer dismissed. The regulator argued that the motion put forth by Binance relies on "distorted" and "tortured" interpretations of federal la...
In a filing made on Wednesday, the SEC challenged Binance's and Binance.US's bid to have the lawsuit it filed against them earlier in the summer dismissed. The regulator argued that the motion put forth by Binance relies on "distorted" and "tortured" interpretations of federal law and legal precedents.
The SEC's initial lawsuit, filed in June, alleged that both Binance and Coinbase had offered unregistered securities to the public. The case against Binance also included additional allegations.
In their recent filing, the SEC said that Binance's argument, if accepted, would effectively "dismantle decades of foundational precedent upon which the nation’s securities laws operate." This would establish a new and unfounded "rigid framework" that contradicts both established legal precedents and existing laws.
Among the SEC's allegations, the regulator claimed that Binance's sale of the BNB token through an initial coin offering as a fundraising mechanism violated securities laws, as did the sale of Binance USD (BUSD) as an investment contract. The agency also argued that the staking and earn programs offered by Binance were in violation of federal securities laws.
Additionally, the SEC refuted an argument put forth by Binance regarding the "Major Questions Doctrine," a principle that requires clear congressional authorization for certain agency actions. This doctrine has been a key defense for crypto companies recently, as they argue that the SEC's actions require more explicit backing from lawmakers.
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.