By George Ward
Challenging The SEC’s Lawsuit
The ongoing regulatory debacle between the US Securities and Exchange Commission (SEC) and the world’s largest crypto exchange, Binance, is far from over. Recently, Binance and its former CEO Changpeng Zhao (CZ) have responded to the regulator’s claims.
The securities watchdog’s claims against Binance revolve around “investment contracts.” However, Binance has filed a counteraction against the regulator, stating that the SEC has a wrong perspective about these contracts.
It said the firm didn’t force customers to enter its site and purchase the tokens, adding that they did so willingly. According to Binance, the SEC should have highlighted the absence of contractual agreement between customers and investment promoters in the transactions under probe.
Also, the firm asserts that it has no binding contract with the promoters of investment funds. Furthermore, Binance challenged the regulator’s oversight of an essential requirement for its case: determining an “investment contract” and its elements.
The exchange added that the SEC should evaluate such claims case-by-case by scrutinizing each transaction rather than making generalizations.
Clamoring For Case Dismissal
Binance’s operating entities, BAM Trading, and BAM Management, echoed Binance’s defiance in a filing on Tuesday, disputing the SEC’s claim that digital asset transactions on BAM’s platform qualify as investment contracts. The firms expressed dissatisfaction with the SEC’s failure to adequately substantiate that the digital asset transactions on their platform fell within the scope of investment contracts.
They emphasized the ambiguity in applying the term “investment contract” to digital assets and argued that such important issues should be addressed by Congress rather than through judicial proceedings. The firms also emphasized the significance of maintaining a separation of powers among regulators, citing the SEC’s history of territorial expansion.
Thus, it is no surprise that Binance is making ongoing efforts to have the SEC’s lawsuit dismissed. Recall that the SEC filed a lawsuit against Binance and its founder, Changpeng Zhao, accusing them of violating the country’s securities laws.
The allegations included claims that the cryptocurrency exchange provided false information to customers and directed funds to a separate investment fund owned by Zhao, violating regulatory guidelines.
CZ And Binance’s Guilty Plea
Meanwhile, the SEC recently notified the court that Binance and its founder had pleaded guilty to criminal violations involving anti-money laundering requirements. CZ agreed to pay a $50 million fine and be barred from further involvement in the business as part of his guilty plea.
Binance also made a similar deal and accepted the appointment of a monitor. In addition, it agreed to pay almost $1.81 billion criminal fine and a $2.51 billion forfeiture order to settle three criminal charges.
The US Justice Department also charged the crypto company with operating an unlicensed money-transmitting business and violating the International Emergency Economic Powers Act.