The United States securities regulator has challenged Binance’s motion to dismiss its lawsuit, asserting that Binance’s legal arguments are fundamentally flawed and lack a basis in law. In a court filing dated November 7th, the SEC rejected Binance’s attempt to have the lawsuit dismissed, contending that no court has adopted Binance’s convoluted interpretation of the law.
The SEC initiated the lawsuit against Binance in June, alleging that Binance, Binance.US, and its founder Changpeng “CZ” Zhao had engaged in the sale of unregistered securities and had not registered as an exchange in the United States.
Binance had argued that the SEC had failed to provide clear guidelines for cryptocurrencies, misconstrued securities laws in the context of crypto, and had overstepped its authority. In response, the SEC stated in its latest rebuttal that Binance had willfully chosen not to comply with federal securities laws.
The SEC pointed to a candid statement from Binance’s Chief Compliance Officer, who acknowledged that Binance was “operating as an unlicensed securities exchange in the USA.” The SEC dismissed Binance’s comparison of cryptocurrencies to supermarket items like oranges as absurd, instead asserting that Binance’s cryptocurrency sales constituted investment contracts under the Howey test.
Furthermore, the SEC reiterated its claims that the initial coin offering of Binance’s BNB token violated securities laws and that Binance USD (BUSD), as well as the yield-bearing staking, Vault, and Earn programs, should be considered investment contracts.
In response to Binance’s argument that the lawsuit violated the major questions doctrine, which was based on a 2022 U.S. Supreme Court ruling stating that Congress does not delegate authority to agencies, the SEC contended that granting Binance’s request for dismissal would undermine the foundational precedent on which the nation’s securities laws are built. Instead, it would establish a rigid framework that disrupts the current broad and flexible regime of securities laws.