The Securities and Exchange Commission (SEC) is still suing Binance, even though it reached a $4.3 billion settlement with US regulators.
On Tuesday, Binance sought the dismissal of the lawsuit in several court documents, alleging that the SEC has used a “novel, contorted interpretation” of securities laws and charged the agency with “territorial aggrandizement.”
In their initial filing, Binance and its founder, Changpeng “CZ” Zhao, contended that the regulator had based “virtually its entire case on the argument that an ‘investment contract’ need not include either an investment or a contract.”
According to the exchange, the complaint filed by the SEC “focuses on transactions by customers who clicked on a website, bought tokens from other anonymous token owners, and then logged off.”
It was asserted by Binance that there was no agreement with a promoter to “invest money into a common business enterprise” and that the regulator had disregarded the idea that an “investment contract” should be established based on each transaction.
Attorneys for Binance’s American subsidiary, BAM Trading Services, charged the SEC with overreach in its second filing, arguing that the agency has regulatory authority over “virtual commodities” even though Congress hasn’t passed a bill granting it such authority.
The attorneys for BAM Trading continued by stating that one would have to “ignore the word ‘contract’ in the term “investment contract” to apply securities law to the platform. The SEC’s previous reply, which was a reaction to the exchange’s move to dismiss, was the subject of both filings.
Binance and Zhao responded to the SEC’s attempt to incorporate the exchange’s guilty plea into its settlement with the Department of Justice in its case with a third filing.
The exchange’s attorneys contended that the admissions of guilt by Binance and Zhao under the Bank Secrecy Act do not address “whether there was fair notice of the SEC’s theory that the crypto assets at issue were securities under the Securities Act or the Exchange Act.”
