Binance, a prominent cryptocurrency exchange, has recently submitted two crucial filings in response to an ongoing case initiated by the U.S. Securities and Exchange Commission (SEC). These filings aim to dismiss the SEC’s case against Binance and its former CEO, Changpeng Zhao, and challenge the allegations made by the regulatory body. In this article, we will delve into the details of the filings and analyze the arguments put forth by Binance’s defense team.
In its first filing, Binance seeks the dismissal of the SEC’s case by contesting the plausibility of the allegations. The filing argues that the SEC has not provided credible evidence to establish that the tokens and services offered by Binance are securities or investment contracts. Moreover, Binance asserts that the SEC’s claims concerning its BNB token are time-barred, as the offerings of this asset occurred either outside of the U.S. jurisdiction or beyond the statute of limitations imposed by the SEC.
Another significant argument presented in the filing is the alleged extraterritorial application of U.S. securities law by the SEC. Binance contends that the SEC’s claims regarding specific transactions on Binance.com, including BNB Vault and Simple Earn, extend beyond the permissible boundaries of securities regulations. The defense asserts that the SEC cannot enforce securities laws outside of the United States in a manner that infringes upon the jurisdiction of other countries.
Binance’s filing further claims that the SEC has failed to provide fair notice about its securities claims, which, according to the defense, warrants the dismissal of the lawsuit. The defense argues that the SEC did not adequately inform Binance about the specific nature of the alleged securities violations, thus denying the company an opportunity to rectify any potential compliance issues. This lack of fair notice raises concerns about the SEC’s approach and its adherence to due process.
Addressing the complaints against Changpeng Zhao, the filing argues that the SEC lacks personal jurisdiction over him due to a lack of substantial contact with U.S. users that is relevant to the case. Binance’s defense lawyers assert that Zhao’s role in controlling Binance alone does not establish jurisdiction, as the SEC has failed to provide evidence demonstrating his direct involvement with U.S. users or transactions. This challenge to personal jurisdiction raises essential questions about the SEC’s ability to hold individuals accountable.
During the week of November 20, Binance and Zhao, separately, reached plea deals with the Department of Justice (DOJ) and various other U.S. government agencies. These agreements, although distinct from the ongoing SEC case, have been brought into consideration by the SEC. However, Binance’s recent filing challenges the relevance of these plea deals and asserts that they do not substantiate the SEC’s claims against the company and Zhao. The defense emphasizes that the plea deals only pertain to violations of the Bank Secrecy Act, without addressing the specific securities and exchange acts relevant to the SEC case.
Binance’s filing outlines several other objections to the SEC’s case and contends that the lack of jurisdiction defenses apply not only to specific Binance entities but also to Zhao himself. The defense argues that the plea agreements do not indicate any occurrence of relevant transactions or establish irrevocable liability within the United States. Regarding personal jurisdiction, the filing draws a distinction between criminal and civil cases, suggesting that jurisdiction may exist in the DOJ case but not in the SEC case. Binance concludes the filing by strongly urging the court to dismiss the entire case and disregard the SEC’s notice.
The ongoing legal battle between Binance and the SEC continues to unfold as the crypto exchange makes robust arguments in its defense. Binance’s filings challenge the SEC’s claims on multiple fronts, including the plausibility of the allegations, extraterritorial application of securities laws, lack of fair notice, and personal jurisdiction. The outcome of this case will undoubtedly have far-reaching implications for the regulation of cryptocurrencies in the United States and beyond.
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