Binance and its former CEO Changpeng Zhao (CZ) continue their legal battle against the SEC. This Tuesday, December 12, 2023, an exchange platform challenged the Securities and Exchange Commission (SEC) with a letter requesting a hearing and challenging the agency’s authority in its race to regulate the cryptocurrency market.
Binance and Changpeng Zhao are fighting back against the SEC
This Tuesday, December 12, 2023, Binance and Changpeng Zhao sent a letter to the Securities and Exchange Commission (SEC) requesting oral submissions to dismiss the charges against themarguing that the SEC does not meet the legal requirements to sue the platform.
This request is filed before the court between the two camps, which concerns the possible fraud of the platform. Binance Accused of Allowing Certain Cryptocurrencies to Be Traded Without Being Registered as Securitiesa term denoting securities in English.
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In fact, two requests were sent, one to defend Changpeng Zhao and Binance, the other to defend Binance’s American branch.
This is not the first time that the SEC and Binance have accused each other through letters. These 2 requests are even a response from the SEC, which previously Binance responded by confirming that its arguments were not based on any legal basis.
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Binance Arguments
First, Binance Says SEC Lacks Authority, Noting It Has Not Reported Crypto Exchanges Violating Securities Laws For Nearly 10 YearsBinance argues that the SEC’s current interpretation of securities laws is new and distorted.
So we can read the different pages of the joint letter of Binance and its former CEO:
“The SEC proposes that its new test only applies if the asset has no “inherent” value, a category of reverse engineering that the agency says only includes cryptocurrency tokens. (…) Indeed, the “lack of historical precedent” for the SEC’s current approach is a “telling indication” that the agency is overstepping the bounds of its statutory authority. (…) The SEC does not have jurisdiction to seek an injunction unless it alleges that the defendant “engages or intends to engage in any conduct or practice that constitutes a violation of the securities laws.
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Later, platform and CZ challenge the basis on which the SEC defines cryptocurrency transactions as investment contracts, specifying that these transactions resemble an exchange between 2 individuals rather than a sale of financial securities. In the introduction, they specify:
“The SEC’s complaint focuses on transactions made by customers who clicked through to a website, purchased tokens from other anonymous token holders, and then logged out. In none of the transactions in question was a contract concluded with the applicant to invest money in a joint venture. »
Finally, Binance is taking the time to defend its former CEO, saying it is unfair to use the platform’s activities to justify legal action against Changpeng Zhao.
The company claims that the SEC’s evidence is insufficient to directly link CZ to the alleged illegal activitiesparticularly those relating to US jurisdiction and stating that there is no cause for legal action against Mr. Zhao in the United States.
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Source: United States Court for the District of Columbia
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