Crypto exchange giant Binance is fiercely contesting the Securities and Exchange Commission’s authority to regulate digital assets, according to recent legal filings.
However, Binance maintains the regulator has overstepped its jurisdiction.
- Binance and its founder CZ have filed multiple motions seeking to dismiss the SEC’s lawsuit alleging securities laws violations
- Binance argues the SEC is incorrectly applying securities laws to crypto transactions that don’t involve “investment contracts”
- Binance claims the SEC failed to evaluate each transaction individually in determining if an “investment contract” existed
- Binance’s US subsidiary says the SEC lacks authority to regulate digital assets absent clear directives from Congress
- Binance maintains its guilty plea in a separate DOJ case is irrelevant to the question of whether crypto assets are securities
In a series of motions last week, Binance argued that many of the crypto transactions cited by the SEC do not constitute “investment contracts” subject to securities regulations. It accused the SEC of inventing a “novel, contorted interpretation” of securities laws to target activities clearly outside its purview.
For an investment contract to exist, Binance’s lawyers contend, there must be an underlying agreement between promoter and investor to pool funds in a common enterprise. They say the SEC failed to evaluate this on a case-by-case basis.
BAM Trading Services, Binance’s US-based subsidiary, echoed this argument while also questioning the SEC’s authority altogether. BAM insisted regulation of digital assets is a “major question” that should be taken up by Congress rather than the courts. Absent explicit congressional directives, BAM said, the SEC has no legitimate power to govern crypto markets.
Binance further maintains that its recent $4.3 billion settlement with the Department of Justice has no relevance to the SEC’s complaints. While Binance and CZ pled guilty to criminal anti-money laundering charges, those violations provide no evidence that the assets traded on Binance’s platform constitute securities.
The dueling court filings represent the latest skirmish in an escalating battle between regulators and the crypto industry. How courts ultimately rule on issues like the SEC’s jurisdiction over tokens could shape the future of digital asset regulation. For now, Binance appears determined to challenge the SEC’s authority at every turn.