Binance Seeks Dismissal of SEC Lawsuit — Claims SEC ‘Distorts’ Securities Laws to Gain Power Over Crypto Industry

Crypto exchange Binance and its CEO Changpeng Zhao (CZ) have filed a motion to dismiss the lawsuit against them by the U.S. Securities and Exchange Commission (SEC). “It is clear that the SEC’s lawsuit has no foundation in the currently enacted securities laws,” they argued, alleging: “In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws.”

Binance and CZ Seek to Dismiss SEC Lawsuit

Cryptocurrency exchange and its CEO Changpeng Zhao (CZ) filed a joint motion on Thursday to dismiss the lawsuit against them by the U.S. Securities and Exchange Commission (SEC).

According to the court filing, the lawyers for Binance and Zhao wrote: “The SEC’s claims against BHL [Binance Holdings Ltd.] and Mr. Zhao should be dismissed with prejudice.” They added:

It is clear that the SEC’s lawsuit has no foundation in the currently enacted securities laws.

“In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws — reading the word ‘contract’ out of the statutory phrase ‘investment contract,’” they further alleged.

Moreover, the lawyers for the crypto exchange and its chief executive warned: “The SEC also seeks to enlarge its jurisdiction globally to include transactions on foreign cryptocurrency platforms, defying supreme court precedent holding that the agency’s regulatory authority ends at the U.S. border.” They stressed: “As the SEC lacks authority to do this, BHL and Mr. Zhao respectfully move to dismiss the Complaint.”

The Binance legal team further argued:

The entire complaint fails because the SEC did not provide fair notice of its novel interpretation of the securities laws.

“Finally, among other deficiencies, the complaint fails to adequately allege that Mr. Zhao personally had the requisite suit-related contacts with the United States to support an exercise of personal jurisdiction over him,” Binance’s lawyers wrote.

In addition, BAM Trading Services (dba Binance US) and BAM Management US Holdings also seek to dismiss the SEC’s charges against them. The SEC filed a lawsuit against Binance entities and CZ on June 5. In the lawsuit, the securities regulator identified 12 crypto tokens as securities.

Do you think the court should dismiss the SEC lawsuit against Binance and CZ? Let us know in the comments section below.