The Securities and Exchange Commission (SEC) stood by its decision to investigate specific cryptocurrency assets, while Binance, the world’s largest cryptocurrency exchange, petitioned a federal judge to dismiss the matter entirely. This might open the way for the SEC to mark its territory in the cryptocurrency market. The SEC and Coinbase had a similar problem the week before.
Binance has asked a US Judge, Amy Berman Jackson, to dismiss the SEC case alleging that Binance violated regulations and engaged in malpractice. This case is one of Binance’s remaining challenges in the United States.
In November, Binance offered to pay $4.3 million to settle a dispute with the US Department of Justice and the Commodity Futures Trading Commission over alleged illicit financial transactions. The company’s CEO, Changpeng Zhao, resigned after admitting responsibility for failing to adhere to US anti-money laundering regulations. Still, it appears that the case is ongoing.
The SEC has levied allegations that Binance, Zhao, and the US division of the exchange engaged in fraudulent activities to inflate its trade volume. Instances of customer funds being misappropriated and the failure to block access to the platform for US customers were also observed. The SEC made additional allegations concerning Binance’s initiation of trading in a variety of unlisted security crypto tokens.
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A significant chunk of the SEC’s lawsuit hinges on determining whether the crypto assets traded on Binance’s trading platform were actually securities that the SEC overlooked.
According to Matthew Gregory, a lawyer for Binance, the SEC appears to be playing both sides of the game.
The Securities Act of 1933 clearly defines security; however, most experts rely on the US Supreme Court judgment to determine whether an investment instrument is genuinely secure.
Jackson contacted the lawyers representing Binance to see if any legislative changes were required, but he preferred to follow the Supreme Court’s order.
The SEC and Coinbase faced a similar issue. The difference is that Coinbase’s case involves both fraudulent acts and market exploitation.
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The SEC has brought several cases in the crypto space. Under Gary Gensler’s leadership, it has brought lawsuits against companies that provide trading platforms and act as broker-dealers. Jackson believes that when it comes to the SEC’s jurisdiction, a clear boundary must be established.
