According to the filing, Congress has evaluated numerous proposals since 2019 to establish a structured and practical framework for crypto assets and their trading platforms. Importantly, none of these proposals aimed to grant exclusive regulatory jurisdiction to the SEC over the cryptocurrency industry. Despite this, the SEC has filed a lawsuit seeking to extend its authority, targeting Binance Holdings Limited (‘BHL’) and Changpeng Zhao, among others.
This article originally appeared on www.coindesk.com
Binance, one of the world’s largest cryptocurrency exchanges, has been making headlines once again as its U.S. affiliate, led by CEO Changpeng Zhao (also known as CZ), filed a motion to dismiss the lawsuit initiated by the U.S. Securities and Exchange Commission (SEC).
The SEC lawsuit, which was filed in the Southern District of New York in March 2021, accuses Binance’s U.S. affiliate of operating an unregistered securities exchange. The SEC claims that Binance violated U.S. regulations by allowing U.S. investors to trade digital assets that are considered securities without having the necessary registration or meeting the required regulations.
In response, Binance’s U.S. affiliate argues that the SEC lawsuit is flawed and fails to provide evidence of actual wrongdoing. The motion to dismiss highlights that Binance has been meticulously adhering to regulatory requirements in various jurisdictions, and it claims that the SEC lawsuit is based on unfounded and incorrect interpretations of the law.
The motion also points out that Binance’s U.S. affiliate was an independent entity, separate from Binance, until it acquired the company in June 2020. It emphasizes that Binance’s involvement in the U.S. entity occurred after the alleged violations took place and argues that the SEC cannot hold Binance accountable for actions that predate its involvement.
Furthermore, Binance’s U.S. affiliate claims that the SEC lawsuit is an inappropriate and disproportionate response to the alleged violations. It argues that the SEC had numerous other options to address any concerns it had, such as engaging in a constructive dialogue or implementing less severe measures, instead of pursuing a lawsuit.
This legal battle between Binance and the SEC comes at a time when regulatory scrutiny on the cryptocurrency industry has been intensifying. Governments and regulatory bodies around the world are striving to establish clearer guidelines and impose stricter regulations to address the potential risks associated with cryptocurrencies, such as money laundering, fraud, and market manipulation.
It is worth noting that Binance, the parent company, has faced regulatory challenges in multiple jurisdictions. Several countries, including the United Kingdom, Japan, and Germany, have issued warnings or taken legal action against Binance for operating without the necessary licenses or regulations.
In response to these challenges, Binance has been working to enhance its compliance measures. The exchange has ramped up its efforts to meet regulatory standards and strengthen its Anti-Money Laundering (AML) and Know Your Customer (KYC) protocols. Binance has also been actively cooperating with regulatory authorities to address any concerns and implement necessary changes.
The outcome of this lawsuit could have far-reaching implications for Binance, the wider cryptocurrency industry, and the future of digital asset regulations. If the motion to dismiss is granted, it would provide Binance’s U.S. affiliate with a major victory and potentially set a precedent for similar cases involving other cryptocurrency exchanges.
Conversely, if the SEC is successful in its lawsuit, it could further strengthen calls for stricter regulations and enforcement actions against cryptocurrency exchanges operating without proper licenses or regulatory oversight. This could impact Binance’s operations globally and serve as a warning to other exchanges to ensure compliance with the evolving regulatory landscape.
As the legal battle unfolds, all eyes will be on the courts to see how they interpret and rule on the SEC’s allegations against Binance’s U.S. affiliate. The verdict will undoubtedly shape the future of Binance and potentially influence the trajectory of digital asset regulations, making this one of the most significant legal battles in the cryptocurrency industry to date.