The United States (US) Securities and Exchange Commission (SEC) remains resolute in its position, asserting in a recent filing that Binance’s plea for dismissal lacks legal merit.
The arguments presented by Binance in its motion to dismiss the lawsuit, according to the SEC, hinge on an erroneous legal analysis and lack a foundation in law.
In a court filing dated 7 November, the SEC rebuffed Binance’s earlier attempt to have the regulator’s suit thrown out, contending that no court has embraced Binance’s perceived “tortured interpretation of the law.”
The SEC contends that Binance’s stance poses a threat to well-established precedents integral to the functioning of the nation’s securities laws, suggesting that Binance’s approach introduces a rigid framework inconsistent with the existing legal system.
The SEC’s allegations specifically target Binance’s introduction of the BNB token and Binance USD (BUSD), labelling them as violations of securities law.
Furthermore, the SEC argues that Binance’s staking and earning programmes run afoul of securities regulations.
Additionally, the SEC challenges Binance’s reliance on the “Major Questions Doctrine,” a principle increasingly invoked by crypto firms in their legal defences.
The SEC mentioned:
“Defendants fail to explain why a doctrine intended to protect Congressional authority to make major policy decisions would be served by precluding the SEC from enforcing the Congressional policy choices embodied in the securities laws.”
Binance, along with its US arm and founder Changpeng Zhao (CZ), contends that the SEC’s lawsuit represents an overreach of its regulatory mandate.
They assert that the agency must demonstrate precisely how their actions violate securities laws.
However, the SEC firmly rejects this notion, emphasising its duty to enforce the legal frameworks established by Congress.
The SEC initiated the lawsuit against Binance in June, alleging that Binance, Binance.US, and founder CZ sold unregistered securities and failed to register as an exchange in the US.
Binance countered by arguing that the SEC failed to introduce clear crypto guidelines, misinterpreted securities laws, and inappropriately applied them to the crypto sector, deeming the suit an overstep of its authority.
In its latest response, the SEC contends that Binance “never complied” with federal securities laws, characterising it as a deliberate choice.
It dismisses Binance’s analogy of comparing crypto to supermarket items as “absurd” and maintains that Binance’s crypto sales constitute investment contracts under the Howey test.
The SEC argues that granting Binance’s dismissal request would dismantle decades of foundational precedent underpinning the nation’s securities laws, replacing it with a rigid framework that disrupts the current broad and flexible regime.