Binance CEO Changpeng ‘CZ’ Zhao and his exchange have filed a motion for the dismissal of the charges brought against them by the US Securities and Exchange Commission (SEC).
The filing, made in the District Court for the District of Columbia, puts forth arguments from Binance Holdings and CZ that the SEC has “overstepped its authority” in pushing the lawsuit.
The 60-page document, dated yesterday 21 September, claims that the SEC did not set out proper regulatory guidelines to the crypto industry before bringing the suit against the world’s biggest exchange.
Due to this, CZ and Binance have accused the SEC of attempting to “retroactively” applying control over the space and that the SEC’s lawsuit “has no foundation in the currently enacted securities laws“.
According to the doc: “In attempting to claim regulatory power over the crypto industry, the SEC distorts the text of the securities laws—reading the word ‘contract’ out of the statutory phrase ‘investment contract.’ The SEC also seeks to enlarge its jurisdiction globally to include transactions on foreign cryptocurrency platforms, defying Supreme Court precedent holding that the agency’s regulatory authority ends at the U.S. border.
“And the SEC pursues these novel theories retroactively, seeking to impose liability for sales of crypto assets that occurred as far back as July 2017, before the SEC provided any public guidance concerning cryptocurrency.
“As the SEC lacks authority to do this, BHL and Mr. Zhao respectfully move to dismiss the Complaint.”
The filing adds: “And the entire Complaint also fails because the SEC did not provide fair notice of its novel interpretation of the securities laws. Because the predicate claims fail, so too do the control-person claims against Mr. Zhao.
“Most of the Complaint fails because the SEC’s claims are premised on a flawed interpretation of the Securities Act’s and Exchange Act’s definition of a ‘security.'”