Binance, Binance.US, and Changpeng Zhao have collectively submitted a motion to dismiss the lawsuit brought against them by the United States Securities and Exchange Commission (SEC). The motion argues that the SEC exceeded its regulatory jurisdiction by initiating the lawsuit without providing clear guidelines for the cryptocurrency sector.
The defendants claim that the SEC is retroactively imposing its authority. The SEC’s lawsuit alleges that Binance, Zhao, and Binance.US listed unregistered securities in the form of cryptocurrencies for trading and investment by US investors, sparking a controversy over the accessibility of Binance.US customer funds. The motion to dismiss highlights that the SEC has expanded its definition of “investment contract” to cover a wide range of crypto assets and transactions, which the legal team of Binance and Zhao considers flawed.
Furthermore, Binance and Zhao argue that the SEC is overstepping its boundaries as Congress has not granted exclusive regulatory authority to the SEC. Binance.US, legally known as BAM Trading Services Inc., has also filed a separate motion to dismiss the charges against it. The ongoing regulatory actions, including the SEC lawsuit, have greatly impacted trading activity on Binance.US, leading to a drastic decline in daily trading volumes and workforce reduction.