Posted: January 19, 2024 8:39 AM Updated: January 19, 2024 8:39 AM
Correction and fact check date: January 19, 2024, 8:39 AM
briefly
Binance plans to engage in a legal battle with the SEC on Friday, demanding that the lawsuit filed in June be dismissed.
Cryptocurrency exchange Binance is scheduled to engage in a legal battle with the U.S. Securities and Exchange Commission (SEC) in a Washington court on Friday. Binance plans to ask a federal judge to dismiss a lawsuit filed against it by the SEC in June.
Regulators accused Binance, along with former CEO and founder Changpeng Zhao and the operators of Binance US, of artificially inflating trading volumes, misappropriating customer funds, failing to restrict US customers from the platform, and creating misleading statements. It is claimed that they have engaged in activities such as providing information that is available to them. Provides information to investors regarding market surveillance and control.
Binance is also accused of facilitating the trading of cryptocurrency tokens, which the SEC considers securities. On January 18, federal Judge Amy Berman Jackson, who presided over the case, ordered a court review to determine whether digital assets are classified as securities. Binance.US’ legal representatives took the opportunity to discuss the question of “whether digital assets remain securities in perpetuity” and address the SEC’s arguments regarding the possibility of classifying staking as a security.
BAM Trading, the operator of Binance.US, argued in court papers that the SEC failed to prove its case for alleged fraud against Binance. In response, Binance argued that the SEC lacks authority to regulate cryptocurrency assets. This argument echoes the position presented Wednesday by lawyers representing Coinbase. Coinbase is also a competitor seeking to have the lawsuit against Coinbase dismissed.
Binance Holdings agreed last year to pay $4.3 billion to settle the matter with the U.S. Department of Justice and the Commodity Futures Trading Commission.
Changpeng Zhao pleaded guilty to violating U.S. laws related to anti-money laundering. However, the SEC’s case, which focuses on Binance’s fundamental business model, remains unresolved, casting a regulatory shadow over the company. The case is one of several brought by regulators against cryptocurrency-related companies in recent years.
SEC against cryptocurrency exchanges
The SEC initially focused on companies involved in selling digital tokens. However, under the leadership of Chairman Gary Gensler, the focus has expanded to include companies that serve as trading platforms, clearing activities, and broker-dealers. In response, cryptocurrency companies claim that most tokens do not meet the SEC’s definition of securities. They argue that industry-specific laws are needed for effective regulation.
The new hearing follows a similar case by the SEC against cryptocurrency exchange platform operator Coinbase. It is important to note that Coinbase has faced charges of operating as an unregistered stock exchange and has not faced any fraud charges.
Last June, the SEC took legal action against Coinbase, accusing it of functioning as an unregistered exchange, broker, and clearinghouse. The SEC alleged that Coinbase facilitated trading in at least 13 tokens that must be registered as securities.
In a court filing Wednesday, Manhattan federal Judge Katherine Polk Failla questioned the classification of tokens listed on the Coinbase platform and sought clarification on whether the tokens could be considered securities. After an extensive hearing that lasted four hours, the judge told her from the stand that she was still contemplating certain aspects, refraining from making an immediate decision.
If a judge is likely to deny Coinbase’s request to dismiss the case, the process will move into the discovery phase. The judge’s decision is expected to have a significant impact on digital assets and potentially provide clarity on the SEC’s jurisdiction within the sector.
Binance’s upcoming legal battle with the SEC and unresolved regulatory issues, as well as recent developments related to the Coinbase incident, highlight the growing importance of regulatory clarity for digital assets.
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About the author
Alisa is a reporter for Metaverse Post. She focuses on everything related to investing, AI, metaverse, and Web3. Alisa holds a degree in Art Business and her expertise lies in the fields of art and technology. She developed a passion for journalism through her work with VCs, notable cryptocurrency projects, and science writing. You can contact us at (email protected).
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alice davidson
Alisa is a reporter for Metaverse Post. She focuses on everything related to investing, AI, metaverse, and Web3. Alisa holds a degree in Art Business and her expertise lies in the fields of art and technology. She developed a passion for journalism through her work with VCs, notable cryptocurrency projects, and science writing. You can contact us at (email protected).
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