Binance ‘Never Complied’ with Federal Securities Laws: SEC
- The SEC claims that Binance “never complied” with US laws and that it was a “deliberate choice.”
- The recent accusations come in response to the exchange’s motion to throw out an SEC lawsuit.
- The court filing added that no court has adopted the exchange’s “tortured interpretation of the law.”
- The SEC remains adamant that the firm’s crypto sales are investment contracts under the Howey test.
Binance, the world’s largest digital asset exchange in terms of trading volume, “never complied” with the United States federal securities laws, claims the Securities and Exchange Commission (SEC) in a recent court filing. The filing came as a response to the exchange’s earlier attempts to persuade the judge to throw out the lawsuit filed by the regulator.
The SEC stated in its argument that the leading exchange used incorrect legal analysis and that its motion to dismiss the lawsuit filed by the regulator has no basis in law. The court filing added that no court has adopted Binance’s “tortured interpretation of the law.”
It is crucial to note that the SEC filed a lawsuit against the exchange in June, alleging that Binance.US and its founder, Changpeng “CZ” Zhao, sold unregistered securities and failed to register their services with the regulator as an exchange in the US.
In its motion, the exchange said that the SEC’s legal action against Binance should be thrown out because the regulator failed to introduce a suitable framework for crypto businesses, misinterpreted securities laws, and applied them to crypto. The crypto firm called the SEC lawsuit an overstep of its authority.
The SEC claims that the crypto trading platform not complying with US laws was a “deliberate choice,” while adding:
“Binance’s Chief Compliance Officer crudely but succinctly summed up this case when he admitted that Binance was ‘operating as a fking unlicensed securities exchange in the USA, bro.’ He was right.”
The regulator also noted that the exchange’s arguments were like comparing crypto to “supermarket items like oranges” and “are absurd.” The SEC remains firm in its belief that Binance’s crypto sales are investment contracts under the Howey test.
The agency noted that granting the firm’s motion to dismiss the SEC lawsuit would “dismantle decades of foundational precedent upon which the nation’s securities laws operate” and, in its place, would be a “rigid framework” that upends the “broad, flexible regime” of the current laws.
As previously reported in October, Binance and CEO Zhao are also attempting to have the court dismiss the United States Commodities Futures Trading Commission’s (CFTC) lawsuit. The lawyers stated that if the court upholds the CFTC’s claims, it “would allow it to regulate any activity in cryptocurrency […] related to a derivatives product” globally.