Binance and its CEO, Changpeng “CZ” Zhao, have taken action against the United States Securities and Exchange Commission (SEC) by filing a motion to dismiss the lawsuit brought against them.
In a 60-page document submitted to the United States District Court for the District of Columbia, Binance Holdings and CZ argue that the SEC has overstepped its authority in pursuing the lawsuit.
The key argument put forth in the motion is that the SEC failed to provide clear regulatory guidance to the cryptocurrency industry before initiating the lawsuit against the crypto exchange.
Binance and CZ accuse the SEC of attempting to retroactively assert regulatory control over the sector. The motion contends that the SEC is trying to impose liability for crypto asset sales dating back to as early as July 2017, a period when the SEC had not yet issued any public guidance on cryptocurrencies.
Therefore, Binance and CZ believe that the SEC’s lawsuit lacks a foundation in the existing securities laws.
This legal battle has taken a toll on Binance’s operations, particularly its American branch, Binance.US. Daily trading volumes on Binance.US have plummeted by over 98% since September 2022.
To further adapt to the situation, Binance.US recently announced a 30% reduction in its workforce and saw the departure of its president and CEO, Brian Shroder.
The heart of the issue lies in the SEC’s attempt to hold both Binance and CZ responsible for the “illegal” sale of crypto assets, some of which occurred before the SEC issued any public guidelines on cryptocurrencies. Binance’s legal team argues that the SEC’s lawsuit lacks a basis in the current securities laws.