The U.S. Securities and Exchange Commission (SEC) said that Binance’s attempts to dismiss the lawsuit against it are invalid.
The regulator called the company’s arguments “absurd.” In its response, the Commission also reiterated that most crypto assets are securities under the Howey test. According to the department, “comparing tokens and, for example, oranges [as a product] is absurd.”
“Binance’s Chief Compliance Officer crudely but succinctly summed up this case when he admitted that Binance was ‘operating as a fking unlicensed securities exchange in the USA bro.’ He was right.”SEC filing
Binance previously stated that the regulator was violating the Fundamental Issues Doctrine. This is the principle of interpretation of regulations in administrative matters. It introduces strict limits for executive authorities in the interpretation of certain laws.
The conflict between the SEC and Binance escalated in June when the regulator filed a lawsuit against the crypto exchange Binance and Zhao. According to the SEC, they violated securities regulations and engaged in “an extensive web of deception, conflicts of interest, failure to disclose information and willful evasion of the law.” The Commission accuses the defendants of violating US securities regulations on 13 counts.
The exchange, its CEO Changpeng Zhao, and the US subsidiary of Binance.US filed a motion to dismiss the lawsuit at the end of September 2023. It states that the Commission exceeded its authority and misinterpreted federal law.