<ul>
 <li>Binance and CZ mount a strong defense against the EC’s securities law violation claims.</li>
 <li>Binance denies securities law violations and disputes product classifications.</li>
</ul>
Binance, the global cryptocurrency exchange behemoth, and its former CEO, Changpeng Zhao (CZ), have launched a strong counteroffensive against the U.S. Securities and Exchange Commission (SEC). The move comes as a response to the SEC’s allegations, where the regulatory body accused the exchange of 13 securities law violations, including the management of customer assets and alleged misdirection of funds.
In a recent <a href="https://storage.courtlistener.com/recap/gov.uscourts.dcd.256060/gov.uscourts.dcd.256060.189.0.pdf" target="_blank" rel="noopener noreferrer nofollow">filing</a> on December 12, submitted to the U.S. District Court for the District of Columbia, Binance and CZ claimed that the SEC failed to meet the criteria outlined in the “Howey Test,” a legal standard used to determine whether a transaction qualifies as an “investment contract.” Binance argued that the SEC’s approach failed to look at the essential requirement that the determination of an “investment contract” should be conducted on a transaction-by-transaction basis.
The filing also addressed the SEC’s attempt to incorporate the $4.3 billion guilty plea and settlement <a href="https://thenewscrypto.com/binances-market-share-drops-amidst-recent-regulatory-woes/" target="_blank" rel="noopener noreferrer nofollow">agreement</a> between Binance and the Department of Justice (DOJ) into the ongoing case. Binance asserted that such an inclusion was procedurally incorrect and should not be permitted.
<h2 class="wp-block-heading" id="h-when-did-it-start">When Did It Start?</h2>
The legal saga between Binance and the SEC began on June 5, 2023, when the regulatory agency brought forth allegations of securities law violations. Among the accusations were claims that Zhao and Binance mishandled customer assets on Binance.US, intertwining and redirecting customer funds.
In a separate development, the DOJ reached a settlement with Binance and CZ in November, resolving its investigation into the company. The <a href="https://thenewscrypto.com/binance-ceo-changpeng-zhao-to-resign-and-plead-guilty-wsj/" target="_blank" rel="noopener noreferrer nofollow">settlement</a> mandated a $4.3 billion penalty for Binance, allowing the exchange to continue its operations under strict adherence to U.S. regulations.
While not officially part of the settlement, the SEC argued that the federal court overseeing its case should consider the statements and acknowledgments made by Binance and Zhao in the November 21 settlement with the DOJ.

Binance and CZ Throw Counterattack Against SEC

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