Binance has kicked back against the securities and exchange commission (SEC) concerning its lawsuit which was filed against the exchange in June.
The exchange and its founder Changpeng Zhao specifically challenged the “investment contracts” aspect of the lawsuit, demanding that the commission give further clarity in an attempt to dismiss the case.
In a filing on Tuesday, the company said that the SEC’s complaint “focuses on transactions by customers who clicked on a website, bought tokens from other anonymous token owners, and then logged off.”
“In none of the transactions at issue did a contract exist with a promoter to invest money into a common business enterprise,” the exchange added, stressing that the SEC ignored the requirement that the existence of an “investment contract” must be determined on a transaction-by-transaction basis.
In a similar filing, BAM Trading and BAM Management, the entities that operated Binance.US, said that the SEC has not adequately alleged that the digital asset transactions on BAM’s platform constitute investment contracts.
“[Even] if there is ambiguity about how to apply the term ‘investment contract’ to digital assets, such a major question should be addressed by Congress and not by a court, a separation of powers proven necessary by the SEC’s own history of territorial aggrandizement,” the companies said.
The SEC Lawsuit
The SEC in June filed a lawsuit against Binance, the largest crypto exchange by trading volume. In the suit, the agency argued that Binance violated the country’s securities laws by not registering as a security trading platform and also allowing the trading of unregistered securities.
The SEC further alleged that Binance was commingling the company’s funds with those of customers and diverting such funds to a private company owned by Zhao. While several attempts have been made to dismiss the case against Binance, not much success has been recorded.
Demanding clarity on the aspect of investment contracts is yet another attempt at securing a dismissal of the case. Meanwhile, Binance has already paid a settlement of $4 billion and Zhao has pleaded guilty to the charges leveled against him.
While referring to this, the SEC filed a notice last week informing the court that Binance and Zhao pleaded guilty to criminal violations involving anti-money laundering requirements.
“This Court may take judicial notice of facts contained in Zhao’s and Binance’s plea agreements and the Consent Order, and consider them in deciding the Joint Motion,” the SEC added.
Zhao’s lawyers have also attempted to secure a release for him to go to the UAE pending ruling in January, but the court has denied the request.
The Crackdown
The SEC hasn’t only sued Binance, it has sued other exchanges as well, including Coinbase and Bittrex, and more recently Kraken. While Bittrex has paid a settlement fine, Coinbase continues to lobby lawmakers to secure justice not just for itself but for the entire crypto industry.
Clearly, the SEC is not relenting in its enforcement approach against the industry, especially as it continues to secure settlements from crypto companies. As the lawmakers are working on a legal framework for the regulation of crypto though, the end of its crypto hunting days may be getting close.
Many times the agency has been asked to provide regulation for crypto, but it insists that crypto doesn’t need new rules to follow.
