Binance and US SEC Reject Third Party Request For Intervention In Lawsuit

In June 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance and Coinbase, two of the world’s largest crypto exchanges. The SEC accuses Binance of violating U.S. law by operating as an unregistered securities exchange and also alleges that the exchange mingled customer funds for its own benefit. 

Notably, a third-party entity named Eeon has become involved in the legal dispute between the SEC and Binance. Eeon argues that both the SEC and Binance’s legal representatives have not adequately represented the interests of Binance’s customers, therefore seeking to intervene and represent these customers.

Both the SEC and Binance have provided their responses to the intervention request made by Eeon. Read on for the details. 

Eeon’s Request For Intervention Challenged by Binance and SEC 

The District Court for the District of Columbia revealed that both Binance and the U.S. SEC opposed the petition from third-party Eeon to intervene in the lawsuit. They contended that the intervention did not meet the necessary legal requirements for intervention and consent.

Binance provided three reasons to dismiss Eeon’s petition, which include the lack of consent from the SEC, Eeon’s failure to identify as a real party in interest, and the inability to meet the legal requirements for intervention. Furthermore, Binance argued that Eeon’s counter-claim contained vague allegations that were unrelated to the main lawsuit.

The U.S. SEC contends that Eeon is a serial pro se litigant, with a track record of unsuccessful causes in federal courts. In response, the SEC urged the court to reject Eeon’s petition based on several grounds. Firstly, the SEC pointed out that the Exchange Act prohibits intervention by private litigants. Secondly, the SEC argued that Eeon’s participation would not significantly impact the lawsuit since its claims align with the defendants’ arguments. Lastly, the SEC asserted that Eeon’s counterclaims seeking relief against both the SEC and Binance are contradictory to the overall proceedings.

Binance Responds to CFTC Complaint, Aims for Dismissal Of Lawsuit 

Binance submitted its response to the CFTC complaint on July 27, with plans to seek dismissal of the lawsuit. The CFTC had sued Binance and its CEO, Zhao, in March, alleging the operation of an “illegal” exchange and a “sham” compliance program.

As regulatory challenges persist and US regulators maintain heightened scrutiny, Binance has experienced notable impacts on trading volumes and liquidity not only on its platform but also across the broader crypto market.

Ripple Judgement To Benefit Binance Against SEC 

The crypto community perceives the ruling in the Ripple lawsuit as a significant moment and considers the judge’s reasoning to provide a fresh line of defense for exchanges like Coinbase, Binance, Bittrex, and others facing SEC scrutiny regarding the trading of securities. This ruling is believed to strengthen Binance’s stance, suggesting that the digital assets traded on such exchanges should not be classified as securities.