In a recent legal filing, Binance, Binance.US, and their CEO Changpeng “CZ” Zhao formally requested the dismissal of all allegations in the SEC lawsuit.
In June, the SEC accused Binance.US, affiliated with Binance Holdings Limited and BAM, of making false statements about their efforts to prevent market manipulation and allowing undisclosed “market making” trading by Sigma Chain, a firm owned by Binance CEO Changpeng Zhao.
Legal representatives of Binance Holdings Limited and BAM argued in their motion to dismiss, submitted on Thursday, that the Complaint lacks specific details about the alleged wrongdoing by Sigma Chain, beyond vague allegations and references to isolated instances of Sigma Chain account interactions:
“Beyond conclusory allegations and citations to isolated instances where Sigma Chain accounts interacted, the Complaint provides no specific allegations regarding Sigma Chain’s alleged misconduct.”
You can see the full filing here.
Additionally, in the comprehensive 60-page legal submission, legal representatives for Binance and Zhao alleged that the SEC neglected to establish transparent industry guidelines before initiating the lawsuit against the cryptocurrency exchange.
They contend that the SEC has retroactively exerted its regulatory influence over the crypto sector.
“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.”
Attorneys representing Binance also argued that the regulator has a fundamental misunderstanding of securities laws and how they relate to cryptocurrencies.
“In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws,” stated the defendants’ legal team in their petition.
Furthermore, Binance.US, formerly known as BAM Trading Services Inc., filed a separate 56-page document seeking the dismissal of charges against it.
A spokesperson for the SEC has not responded to a request for comment beyond regular business hours.
The SEC’s action against Binance followed a similar move by the Commodity Futures Trading Commission (CFTC), which filed a lawsuit against Binance three months earlier for failure to register with the CFTC and for violating numerous regulations.
Due to the ongoing regulatory scrutiny on the exchange, trading activity on Binance.US has seen a significant decline, with daily trading volumes plummeting by over 98% since September 2022. On September 13, Binance.US had to reduce its workforce by 30%, and its president and CEO, Brian Shroder, also left the company.
