CEO Changpeng Zhao and Binance Request Court to Dismiss SEC Lawsuit

Binance’s CEO, Changpeng “CZ” Zhao, along with the cryptocurrency exchange itself, have jointly filed a motion seeking the dismissal of the lawsuit brought against them by the United States Securities and Exchange Commission (SEC).

In a legal filing submitted on September 21 to the United States District Court, Binance Holdings and Zhao argued that the SEC had exceeded its authority in initiating the lawsuit against them.

Within the 60-page petition, the legal representatives for Binance and Zhao accused the SEC of a lack of clarity in its regulatory approach to the cryptocurrency sector prior to the lawsuit, effectively attempting to retroactively impose regulatory oversight.

“The SEC pursues these unconventional legal theories retroactively, attempting to hold accountable for cryptocurrency asset sales dating as far back as July 2017, a time when the SEC had yet to provide any public guidance regarding cryptocurrencies.”

“It is evident that the SEC’s lawsuit lacks a foundation within the existing securities laws.”

Furthermore, Binance’s legal team contended that the SEC had fundamentally misconstrued securities laws in their application to digital assets.

“While seeking to assert regulatory control over the cryptocurrency industry, the SEC distorts the wording of the securities laws,” the filing stated.

In addition to the joint petition from Binance and Zhao, Binance’s American arm, Binance.US, officially known as BAM Trading Services Inc., also submitted a separate 56-page motion on the same day, seeking the dismissal of the charges.

The SEC initiated the lawsuit against Binance and its affiliated entities on June 5, alleging that Binance had offered the sale of unregistered securities and had been operating unlawfully within the United States.

This regulatory action by the SEC followed a similar move by the Commodity Futures Trading Commission (CFTC), which had sued Binance three months earlier for its failure to register with the commission and for violating several of its regulations.

The ongoing legal proceedings have had a substantial impact on trading activity on Binance.US, with daily trading volumes plummeting by more than 98% since September 2022. On September 13, Binance.US announced a workforce reduction of 30%, along with the departure of its president and CEO, Brian Shroder.

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