The US Securities and Exchange Commission (SEC) has sued Binance; a coordinated defence effort is in progress. Based on allegations that date at least as far back as July 2017, this lawsuit asserts that Binance, led by CEO Changpeng Zhao, operated as unregistered exchanges, brokers, dealers, and clearing agencies, earning a sizable amount of money mainly from transaction fees from customers in the United States1. Given these claims, the US-based Chamber of Digital Commerce has teamed up with numerous other companies, associations, attorneys, and politicians to oppose the SEC’s action.
A recent amicus brief encapsulates the essence of this collaborative opposition. The statement lays out two goals: first, to stop the SEC from regulating the cryptocurrency industry without express permission from Congress; and second, to contest the SEC’s enforcement-based regulatory approach. The amicus brief reflects a more general industry view on the SEC’s authority over digital assets, arguing that the agency is not legally required to categorise all digital assets as securities.
Based on this reasoning, the Chamber of Digital Commerce has asked the court to reject the SEC’s lawsuit against Binance.
The grounds for rejection highlight the claimed overreach of the SEC, the contention that token transactions do not satisfy the Exchange Act registration requirements, and the argument that digital assets do not qualify as investment contracts. This move is in line with the position of CEO Changpeng Zhao, Binance.US, and Binance Holdings, who have all filed a motion to dismiss the action on the grounds that the SEC has overreached its authority.
Furthermore, Binance.US has expressed its displeasure with the SEC’s most recent demands for depositions and document discovery, calling them irrational. The United States-based cryptocurrency exchange Binance.US strengthened this position when it formally opposed to the SEC’s request for more information and provided the required paperwork to do so.
The cooperative effort led by the Chamber of Digital Commerce represents a strong industry backlash against the SEC’s regulatory strategy for the emerging cryptocurrency market, as well as a strong defence against the SEC’s case. This cooperative resistance sheds light on the continuous conflict between law enforcement and cryptocurrency organisations, a relationship that keeps changing in the context of the legal debate that is developing around Binance.USA.