Binance Readies to Ask Court to Toss SEC Lawsuit

9 months ago 3

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Binance is set to confront the US Securities and Exchange Commission (SEC) in a Washington courtroom.

This event marks a pivotal moment, as it is the second high-profile hearing this week involving the SEC and a top crypto exchange. The focus of the hearing, scheduled for January 19, revolves around Binance’s motion to dismiss a lawsuit filed by the SEC in June 2023.

SEC vs Binance: Seeking Lawsuit Dismissal

The SEC’s lawsuit presents a series of allegations against Binance, including artificially inflating trading volumes, diverting customer funds, failing to restrict US customers from its platform, and misleading investors about its market surveillance controls. The regulator also accused the crypto exchange of enabling the trading of several crypto tokens deemed as securities.

“Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” SEC Chair Gary Gensler said.

These allegations form a part of a broader effort by the SEC under Chair Gary Gensler’s leadership. Last year, the SEC shifted its focus from companies selling digital tokens to those offering trading platforms and clearing activities.

Binance’s response to these allegations has been robust. The company argues that the SEC lacks the authority to oversee crypto assets. Another crypto exchange, Coinbase, echoes a similar stance in its own legal battle with the SEC.

Binance has previously settled with the Department of Justice (DoJ) and Commodity Futures Trading Commission (CFTC), agreeing to pay $4.3 billion. Moreover, its CEO, Changpeng Zhao, pleaded guilty to breaking US laws designed to prevent money laundering. Still, the current SEC lawsuit targeting Binance’s core business model remains unresolved, posing a significant threat to the company’s operations.

Due to these legal troubles, Binance market share has declined from 54.2% at the beginning of 2023 to 48.7%.

The implications of this lawsuit extend beyond Binance, affecting the entire crypto industry. Crypto companies have consistently argued that most tokens do not meet the SEC’s definition of security and have called for legislation to regulate the industry.