Binance CEO Changpeng Zhao Challenge SEC’s Lawsuit – Binance Holdings, its U.S. subsidiary, and its CEO, Changpeng “CZ” Zhao, have submitted a request to the U.S. District Court for the District of Columbia, urging for the dismissal of the lawsuit brought against them by the U.S. Securities and Exchange Commission (SEC).
According to the filing on September 21, both the cryptocurrency exchange and Zhao argue that the SEC has exceeded its legal boundaries with the lawsuit. They emphasize in their 60-page petition that the SEC did not provide definitive regulations for the cryptocurrency sector before launching its lawsuit. They argue that the regulatory body is trying to enforce its authority on the industry retroactively.
The lawyers representing Binance and Zhao stated, “The SEC has retrospectively pursued these unprecedented theories, attempting to hold Binance accountable for crypto asset sales dating back to July 2017, a period during which the SEC had not offered any public guidance on cryptocurrencies.”
They further argued, “It’s evident that the SEC’s lawsuit lacks grounding in the existing securities laws.”
The defense also pointed out that the SEC’s interpretation of securities laws concerning crypto assets is fundamentally flawed. They stated, “In its quest to exert control over the cryptocurrency sector, the SEC is misrepresenting the actual wording of securities regulations.”
Binance’s U.S. arm, Binance.US, which operates under the legal entity BAM Trading Services, also filed a separate 56-page motion for dismissal on the same day.
The SEC had previously levied charges against Binance and its associated entities on June 5, alleging that the exchange engaged in the sale of unregistered securities and conducted illegal operations within the U.S. This lawsuit by the SEC followed a similar action by the Commodity Futures Trading Commission (CFTC) three months prior, in which the CFTC accused Binance of neglecting to register and of violating several of its rules.
The ongoing regulatory challenges have severely impacted Binance.US’s trading activity. The platform witnessed a staggering 98% decline in daily trading volumes since September 2022. On September 13, Binance.US also announced significant staff cuts, laying off 30% of its workforce. Additionally, the company’s president and CEO, Brian Shroder, left the organization.