A
pivotal hearing unfolded in a Washington DC federal courtroom today (Monday), as Binance faced intense scrutiny
from Federal Judge Amy Berman Jackson. Lawyers for Binance were pressed to
defend their request for the dismissal of a high-profile lawsuit brought
against the exchange by the US Securities and Exchange Commission (SEC).
Binance
has sought to have the SEC’s lawsuit tossed out, a legal battle representing
one of the last major challenges for the cryptocurrency exchange in the United
States. The SEC, in June of the previous year, accused Binance, its then-CEO
Changpeng Zhao, and the exchange’s US arm of multiple infractions, including
artificially inflating trading volumes, diverting customer funds, failing to
restrict US customers, and providing misleading information about market
surveillance controls.
At
the heart of Monday’s hearing was a core argument put forth by Binance’s legal
team – that the SEC lacks the authority to regulate the crypto assets in
question because they do not meet the definition of an investment contract. The
Securities Act of 1933 provides a definition of the term “security,”
with a crucial legal test relying on a US Supreme Court case. This test
evaluates whether individuals are contracting to invest in a common enterprise
with the expectation of profit.
Binance kicks off oral arguments in push to end SEC lawsuit https://t.co/56YO2nCFfa pic.twitter.com/rK1J72z8vw
— Reuters (@Reuters) January 22, 2024
Allegations
Against Binance and Coinbase Unveil Legal Dynamic
Judge
Jackson pressed Binance’s lawyers on how their argument aligns with the
assertion that the crypto sector requires new regulation, considering existing
case law indicating that securities laws are designed to be flexible to protect
investors. The courtroom engagement marked the second high-profile battle in
recent days where the SEC had to defend its regulatory authority over the
crypto sector. In a similar vein, Coinbase and the SEC
clashed last week on comparable issues.
Notably,
the SEC’s case against Binance
differs from its dispute with Coinbase, as it includes additional allegations
of fraud and market manipulation. In the preceding year, Binance had agreed to
a substantial $4.3 billion settlement with the Department of Justice and the
Commodity Futures Trading Commission over illicit finance breaches. Zhao had
pleaded guilty to breaking US anti-money laundering laws and stepped down as
CEO as part of the settlement. However, the SEC’s case continues to
loom over the exchange.
A
pivotal hearing unfolded in a Washington DC federal courtroom today (Monday), as Binance faced intense scrutiny
from Federal Judge Amy Berman Jackson. Lawyers for Binance were pressed to
defend their request for the dismissal of a high-profile lawsuit brought
against the exchange by the US Securities and Exchange Commission (SEC).
Binance
has sought to have the SEC’s lawsuit tossed out, a legal battle representing
one of the last major challenges for the cryptocurrency exchange in the United
States. The SEC, in June of the previous year, accused Binance, its then-CEO
Changpeng Zhao, and the exchange’s US arm of multiple infractions, including
artificially inflating trading volumes, diverting customer funds, failing to
restrict US customers, and providing misleading information about market
surveillance controls.
At
the heart of Monday’s hearing was a core argument put forth by Binance’s legal
team – that the SEC lacks the authority to regulate the crypto assets in
question because they do not meet the definition of an investment contract. The
Securities Act of 1933 provides a definition of the term “security,”
with a crucial legal test relying on a US Supreme Court case. This test
evaluates whether individuals are contracting to invest in a common enterprise
with the expectation of profit.
Binance kicks off oral arguments in push to end SEC lawsuit https://t.co/56YO2nCFfa pic.twitter.com/rK1J72z8vw
— Reuters (@Reuters) January 22, 2024
Allegations
Against Binance and Coinbase Unveil Legal Dynamic
Judge
Jackson pressed Binance’s lawyers on how their argument aligns with the
assertion that the crypto sector requires new regulation, considering existing
case law indicating that securities laws are designed to be flexible to protect
investors. The courtroom engagement marked the second high-profile battle in
recent days where the SEC had to defend its regulatory authority over the
crypto sector. In a similar vein, Coinbase and the SEC
clashed last week on comparable issues.
Notably,
the SEC’s case against Binance
differs from its dispute with Coinbase, as it includes additional allegations
of fraud and market manipulation. In the preceding year, Binance had agreed to
a substantial $4.3 billion settlement with the Department of Justice and the
Commodity Futures Trading Commission over illicit finance breaches. Zhao had
pleaded guilty to breaking US anti-money laundering laws and stepped down as
CEO as part of the settlement. However, the SEC’s case continues to
loom over the exchange.