Binance and CZ Seek SEC Lawsuit Dismissing, Call it Regulatory Overreach

• Binance Holdings and CZ have submitted a joint motion to dismiss the SEC lawsuit.
• The filing states the SEC does not accuse Binance or CZ of committing fraud or harming investors.

Binance, the world’s largest cryptocurrency exchange, and its CEO, Changpeng Zhao, known as CZ, have jointly filed a motion to dismiss the United States Securities and Exchange Commission (SEC) lawsuit against them. The filing, made on September 21 in the United States District Court, argues that the SEC exceeded its authority by bringing the lawsuit.

In their 60-page petition, legal representatives for Binance and Zhao contend that the SEC failed to provide clear regulatory guidelines for the cryptocurrency sector before initiating legal action against the exchange. Also, they argue the Securities and Exchange Commission retroactively imposed its regulatory authority over the crypto industry.

Notably, the filing highlights the absence of fraud allegations, emphasizing that the “SEC does not claim that BHL or Mr. Zhao committed any fraud or harmed a single investor.”

In June the SEC filed a lawsuit against Binance, its US-based affiliate Binance.US, and CZ, which includes allegations of operating unregistered exchanges, broker-dealers, and clearing agencies.

However, both Binance and Binance.US have publicly denied these allegations. But they have experienced a significant decline in market share in the wake of increased regulatory scrutiny. This decline has also led to changes within the organization, including the resignation of Binance.US’s CEO and layoffs affecting approximately one-third of the platform’s workforce.

The outcome of this legal battle will be crucial. Also, it may have far-reaching implications for the cryptocurrency sector and the regulatory framework surrounding it.