Binance and CZ Challenge SEC's Broad Crypto Authority in Lawsuit

Summary

• Binance, CZ, and Binance.US are seeking to dismiss the SEC's lawsuit, arguing that the SEC has not provided sufficient evidence of securities-related violations and is overextending its authority in regulating the cryptocurrency industry.

Binance, its CEO, Changpeng Zhao, along with its U.S. affiliate, Binance.US, have filed a motion to dismiss the Securities and Exchange Commission's (SEC) lawsuit, claiming that the SEC has failed to substantiate its allegations of securities-related violations.

The lawsuit, which was initially filed by the SEC in June, accused Binance of illegally listing unregistered securities through various cryptocurrencies for U.S. investors.

Binance's defense hinges on the argument that the SEC has failed to "plausibly allege" securities-related violations and is overextending its authority. They assert that Congress has not explicitly granted the SEC the power to regulate the crypto industry.

"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," one of the filings stated.

Additionally, the legal challenge invokes the "major questions doctrine," a Supreme Court ruling that calls for federal agencies to await Congressional authority on significant economic or political issues. The filings point out that Congress has been considering multiple proposals related to crypto regulation since 2019, none of which would give exclusive regulatory authority to the SEC.

The outcome of this legal battle will undoubtedly have far-reaching implications for the cryptocurrency industry, as it grapples with the question of regulatory oversight and clarity in the United States.