Binance Wants SEC Lawsuit Dismissed, Argues Regulator Fails To Meet Legal Requirement

Updated: 13 December 2023

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Binance asked for a lawsuit brought against it by the US Securities and Exchange Commission (SEC) to be dismissed, arguing that its case failed to meet the requirements of the so-called ”Howey Test.”

Binance, Binance.US and former CEO Changpeng Zhao argued in December 12 filings that the SEC had failed to show that it had contracts with US customers that could be defined as an ”investment contract” as detailed by the legal definition in the Howey Test.

⚡️Binance Affirms SEC Has No Right to Use Agreement with Department of Justice to Proceed with Charges 🚫
⚡️ Binance, one of the leading cryptocurrency exchanges, has officially declared that the United States Securities Commission (SEC) has no legal basis to use Binance's… pic.twitter.com/HGiXos7yuR

— Sophia Kong (@Sophiakong789) December 13, 2023

In June, the SEC alleged that the two Binance entities facilitated the trading of unregistered securities when it listed Solana (SOL), Cardano (ADA), and Polygon (MATIC), among other tokens. The entities were also charged with offering staking services.

This is the latest attempt by the exchange to have the case dismissed. In September, while still led by Zhao, the world’s biggest crypto exchange filed for a dismissal of the same lawsuit on grounds of “regulatory overreach” by the securities regulator.

Binance Rejects SEC’s Attempt To Add DoJ Settlement To Its Case

The filing also rejected an attempt by the SEC to add to its case recent admissions of guilt by Binance and Zhao in connection with a $4.3 billion settlement with the Department of Justice. The exchange’s filing argued that it was procedurally wrong and should not be allowed.

The “facts in the plea agreements” do not “say anything about 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,” Binance said.