SEC Says Binance Arguments To Dismiss Lawsuit Are ''Absurd,'' Have No Basis In Law

SEC Says Binance Arguments To Dismiss Lawsuit Are ”Absurd,” Have No Basis In Law

Updated: 09 November 2023

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The Securities and Exchange Commission (SEC) said arguments made by Binance to dismiss its lawsuit are ”absurd” and have no basis in law.

The SEC is pushing back against an attempt by Binance to dismiss the lawsuit, saying the exchange has a “tortured interpretation of the law” in a recent filing. It added that a ruling to dismiss the lawsuit would “dismantle decades of foundational precedent upon which the nation’s securities laws operate.”

The SEC filed a lawsuit against Binance and its CEO, Changpeng Zhao in June. The charges include operating an unregistered exchange and offering unregistered securities: BNB and BUSD.

Binance later filed a motion to dismiss the lawsuit, accusing the SEC of regulatory overreach. The exchange blamed the SEC for a lack of clear crypto regulations, misinterpreting securities laws, and applying them to crypto.

🤷‍♂️

Binance v. SEC: Paradigm Files Amicus Brief, Accuses SEC Of Regulatory Overreach https://t.co/PjGv6QFZX6

— CZ 🔶 Binance (@cz_binance) September 30, 2023

Binance Arguments Are “Absurd,” SEC Says

The SEC has called some of Binance’s arguments, such as comparing crypto assets to grocery items, “absurd.” It reiterated that crypto sales on the exchange constituted investment contracts under the Howey test.

The SEC has also responded to Binance’s argument that the suit violated the “Major Questions Doctrine.”

The doctrine comes from last year’s Supreme Court ruling that Congress does not delegate authority to federal agencies. Several crypto companies have cited the ruling in response to the SEC’s overreach.

“This civil enforcement action lacks the vast economic or political significance that the Supreme Court has pointed to when invoking the major questions doctrine,” it said.

The securities regulator further says that granting Binance’s motion would tear down precedents in securities laws. It would create a “rigid framework” without basis in case precedent or existing law.

SEC Opens Talks With Grayscale On Bitcoin ETF

Following Grayscale’s legal win against the SEC, the securities regulator might soon approve a spot Bitcoin ETF, going by recent developments.

The regulator has opened talks with Grayscale to convert its trust Bitcoin product (GBTC) into a spot Bitcoin ETF.

Looks like we've got some confirmation of (1) without a hard timeline (so almost certainly decided alongside the other open apps). The most likely outcome. https://t.co/yvRvU1xbYj pic.twitter.com/5tNXcDVU8Y

— Scott Johnsson (@SGJohnsson) November 8, 2023