Binance and CZ seek to dismiss the SEC’s cryptocurrency lawsuit.
In a legal move that began in June, the SEC accused Binance.US, linked to Binance Holdings Limited, of conducting unregistered securities transactions in the form of cryptocurrencies for U.S. investors. The exchange is also accused of market manipulation and money laundering.
In a recent filing submitted to the U.S. District Court, both Binance Holdings and Zhao argue that the SEC has exceeded its regulatory boundaries. Their legal team argues that the SEC’s efforts to regulate the cryptocurrency industry have misrepresented the true purpose of securities law.
The filing states, “In its quest for regulatory dominion over the cryptocurrency industry, the SEC has contorted the text of the securities laws.”
Furthermore, Binance.US, the cryptocurrency exchange’s U.S. branch, submitted a 56-page motion on the same day, requesting the dismissal of the allegations against them.
The legal battle unfolds as the SEC alleges that Binance.US deceived investors into preventing market manipulation and enabling money laundering through an undisclosed “market maker” company, Sigma Chain, owned by CZ Zhao. Money laundering transactions, under securities law, require fraudulent intent to manipulate the market.
The legal documents presented by Binance and Zhao argue that the SEC’s allegations lack substantial supporting evidence and have been overstated. They call on the court to dismiss the lawsuit.
Moreover, the filings argue that the SEC’s statements are not consistent with the doctrine of primary jurisdiction, which requires federal agencies to defer to Congress’s authority on matters of economic or political significance not clearly defined in the law.