Binance US and Changpeng Zhao File for Dismissal in SEC Lawsuit
Binance and its CEO CZ Zhao file motion to dismiss SEC lawsuit, challenging regulator's authority over crypto assets.
Binance, its CEO Changpeng (CZ) Zhao, and the US branch of the exchange have filed a motion to dismiss the lawsuit brought against them by the US Securities and Exchange Commission (SEC).
The SEC has sued the parties last June, alleging that the centralized exchange (CEX) had not complied with federal financial asset laws. Now, the exchange itself is responding to these allegations, stating that the regulator acted with "presumption" in asserting violations related to financial assets under its authority. This is based on the argument that Congress never recognized such tasks to be within the SEC's purview.
Cryptocurrency trading, in general, has always been under the scrutiny of the SEC. The regulator has consistently played on the challenging categorization of cryptocurrencies as either "security" or "commodity" to exert its authority over the industry. Specifically, the lawsuit also raised doubts about the security of funds deposited on Binance US. It insinuated that these funds could be used by the company at the expense of its customers.
"The SEC recently brought several enforcement actions – including this action – premised on its new position that virtually all crypto assets, and virtually all cryptoasset transactions, are securities'"
Since 2019, according to Binance, there have been about a dozen proposals provided to Congress to formulate a consistent and feasible regulatory framework for cryptocurrencies. However, all of these were rejected by the SEC, presumably because it would lose its exclusive jurisdiction over the sector.