Binance, its US arm Binance.US, and Changpeng Zhao "CZ" have officially filed a joint motion in court to dismiss the lawsuit brought against them by the Securities and Exchange Commission (SEC).

Binance Files Motion to Dismiss SEC Lawsuit

In the motion filed yesterday (Thursday), crypto exchanges and CZ claimed that the US regulator had overstepped its authority while filing the lawsuit, adding that the allegation by the regulator did not consider various "plausibly alleged" securities-related violations. The latest motion further pointed out that the SEC is trying to push its authority over digital assets.

"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 motion argued. "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."

Serious Charges

The SEC filed the lawsuit against Binance, its US unit, and CZ, raising many allegations against them, including the operation of an illegal exchange and even co-mingling of clients' funds, which is very serious.

However, Binance immediately reacted to the allegations, calling them "simply wrong." It additionally questioned the authority of the US securities regulator.

"The SEC pursues these novel theories retroactively, seeking to impose liability for sales of crypto assets that occurred as far back as July 2017, before the SEC provided any public guidance concerning cryptocurrency," the latest motion noted. "It is clear that the SEC's lawsuit has no foundation in the currently enacted securities law."

The SEC's lawsuit came three months after the US commodities regulator brought a lawsuit against the exchanges and Binance.com's CEO for registration failure and violating several other regulatory guidelines. The CFTC lawsuit further highlighted the incompetency of Binance's compliance system.

Implications of the SEC Lawsuit

Meanwhile, the global dominance of Binance received a massive blow following the SEC's lawsuit. With increasing regulatory pressure against it, the exchange had to withdraw its presence from several jurisdictions. Thus, the trading volume on the exchange nose-dived.

Furthermore, the US entity of Binance went all crypto, shedding the fiat support, and is not witnessing an exodus of top executives, including the CEO. Consequently, the exchange laid off dozens of its staff.