Binance and Changpeng Zhao Seek Dismissal of SEC Lawsuits

Binance, Binance.US and the exchange’s chief Changpeng Zhao have filed motions to dismiss the SEC lawsuits, describing the regulator’s arguments as implausible. CoinDesk reports.

In one filing, the agency was said to have given too broad a definition of the term “investment contract”.

“The SEC recently took several enforcement actions, including this suit, based on its new position that virtually all crypto assets and nearly all transactions involving them are securities,” the exchange said.

The motions also contained similar arguments regarding the so-called “major questions doctrine” — a Supreme Court doctrine requiring federal agencies to await Congress’s decision on significant economic or political questions.

“Indeed, since 2019, Congress has considered more than a dozen proposals that would provide a coherent and workable framework for crypto assets and trading platforms. Despite this, the SEC is now seeking to expand its powers,” the exchange’s lawyers said.

On June 5, the SEC filed a lawsuit against Binance and Zhao, accusing them of 13 counts, including the sale of unregistered securities. On June 6, the regulator filed a motion to freeze the digital assets of the exchange’s U.S. subsidiary.

On June 9, users lost the ability to deposit dollars, prompting selling by those seeking to withdraw funds in fiat. In the wake of this, on the platform a discount formed in Bitcoin-dollar quotes — the figure reached about $2,200 (7.3%).

On June 17, the SEC and Binance reached an agreement on customer funds in the United States. The exchange resumed withdrawals of assets, but the company warned that the situation could change.

Later, the agency accused Binance.US of unwillingness to cooperate. In the regulator’s view, the platform’s actions violate the agreements between the parties regarding a ban on cross-border withdrawals.

According to the agency, the exchange’s parent company — BAM — delayed preparing the requested documents. The court refused to compel the U.S. unit of Binance to provide the SEC with expanded information on the handling of customer assets. The company itself described the regulator’s requests as “too broad” and “unnecessarily burdensome”.

According to an internal presentation by the exchange, Binance.US’s growth prospects are limited due to ties to Zhao and the current regulatory environment.