Binance, Binance.US and Changpeng Zhao filed to dismiss a Securities and Exchange Commission (SEC) lawsuit Thursday, claiming the regulator hadn’t “plausibly alleged” various securities-related violations, and that it was seeking to encompass digital assets under its authority despite Congress not explicitly spelling that out in legislation.
The SEC sued Binance, Zhao and Binance.US in June, alleging they illegally listed unregistered securities in the form of several cryptocurrencies for trading and investment by U.S. investors. The suit immediately kicked off a legal fight over just who could access Binance.US customer funds. In Thursday’s filings, attorneys for Binance and Binance.US said the regulator was overreaching by alleging violations of securities law.
“The SEC recently brought several enforcement actions – including this action – premised on its new position that virtually all crypto assets, and virtually all cryptoasset transactions, are securities,” one of the filings said.
The agency was defining the term “investment contract” too broadly, one of the filings said.
Both filings also raised similar arguments over the so-called “major questions doctrine,” a Supreme Court ruling that directed federal agencies to await Congressional authority over significant economic or political issues that
“Indeed, since 2019, Congress has considered more than a dozen proposals that would provide a coherent and workable framework for crypto assets and their trading platforms,” the filing said. “Critically, none of those proposals would confer sole regulatory jurisdiction over the crypto industry to the SEC. Despite this, the SEC now seeks to expand its authority and filed this lawsuit, asserting claims against Binance Holdings Limited (‘BHL’) and Changpeng Zhao, among others.”
The argument has proven divisive in court, with some judges ruling that Congress needs to clarify the regulatory treatment of digital assets and others ruling that crypto was not nearly significant enough to meet the doctrine. While the House Financial Services Committee has advanced a few crypto-specific bills to the full House for a vote, it is less clear whether they will move through the Senate.