Binance Fires Back at SEC, Challenges Lawsuit Over Alleged Securities Violations
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Binance, the world’s leading cryptocurrency exchange, and its U.S. counterpart, Binance.US, are mounting a vigorous defense against the lawsuit brought forth by the U.S. Securities and Exchange Commission (SEC) in June.
The regulatory battle centers around accusations that the platforms, along with their founder, Changpeng Zhao (popularly called CZ), illegally offered unregistered securities to U.S. customers through specific cryptocurrencies and a staking service.
Binance Says the SEC Failed to Demonstrate “Investment Contracts” Claim
In a recent filing, Binance and CZ contend that the SEC has fallen short in demonstrating that the mentioned cryptocurrencies qualify as “investment contracts” under the Howey Test, a legal benchmark set by the Supreme Court. Binance.US, echoing a similar sentiment in a separate response, also asserts that the SEC has not proven any post-purchase obligations to users after acquiring the cryptocurrencies.
This marks the latest chapter in Binance’s determined effort to quash what they perceive as an overreach of regulatory authority. Despite recent settlements with various U.S. agencies, including the Department of Justice, the Commodity Futures Trading Commission, and the Financial Crimes Enforcement Network, Binance maintains that the SEC lawsuit is unwarranted.
Binance further challenges the SEC’s reliance on plea agreements with other agencies as evidence of the exchange’s awareness of U.S. operations. Disputing the SEC’s interpretation, Binance asserts that these settlements should not be considered grounds for denying their motion to dismiss.
The SEC’s legal action against the giant crypto exchange forms part of a broader regulatory crackdown on the cryptocurrency industry in the United States. As regulators intensify their scrutiny, the outcome of this legal tussle will undoubtedly have far-reaching implications for the future of cryptocurrency exchanges and their compliance with securities laws.
