Binance’s Latest Attempt to Dismiss the Lawsuit
Binance, Binance.US and Changpeng Zhao alleged in their lawsuit against both companies and Zhao that the US Securities and Exchange Commission failed to comply with the “Howey test”.
Binance and Zhao (better known as CZ), along with Binance.US, filed a response with the SEC. Binance.US filed its own separate but similar filing, arguing that the SEC failed to demonstrate that U.S. exchange clients had contracts that would qualify as an “investment agreement” or that other aspects of the Supreme Court case were satisfied.
The latest attempt to dismiss a lawsuit filed in June by the federal regulator SEC. It was alleged that Binance.US and Binance.com enabled the public to trade and purchase unregistered securities by listing certain cryptocurrencies.
Binance, which recently settled with the US Department of Justice and the Commodity Futures Trading Commission, as well as the Office of Foreign Asset Control, the Financial Crimes Enforcement Network and the Commodity Futures Trading Commission (CFTC), filed with the SEC Sue a suit in September. It was argued that the regulator had exceeded its powers.
Binance and Binance.US both argued in their filings on Tuesday that the SEC had not shown any obligations to the exchange users who purchased certain cryptocurrencies. They argued that there was no contract between the exchange and its users, as required by the Howey test.
DOJ Settlement
Binance has also responded to the SEC by incorporating its guilty plea and consent order filed with FinCEN with the DOJ or Zhao’s own DOJ filing into the ongoing matter.
The SEC alleged that Binance knew it was operating and serving US customers and using infrastructure in the US to conduct transactions.
The SEC stated that “Zhao and Binance’s plea agreements and consent order provide this court with additional grounds to deny the joint motion to dismiss.”
Binance claimed in a second filing on Tuesday that the securities laws do not apply would. as did the Bank Secrecy Act and the International Emergency Economic Powers Act (two laws that governed the allegations that Binance settled with Zhao).
Binance and Zhao claimed that the SEC claims were not covered by securities laws because of the SEC’s approvals under the BSA.
The filing also argued that the settlements, consent orders and other agreements did not violate securities laws.
The filing states: “The fact that the facts in the plea agreement with the Department of Justice showed that BHL violated the Bank Secrecy Act (BSA) says nothing about fair disclosure of the SEC’s theory about the cryptocurrencies in question. Assets from.” are securities under the Securities Act or Exchange Act.”
