Binance and Chief CZ Appeal Court To Dismiss The SEC Lawsuit
On Thursday, September 21, Binance Holdings Ltd. and its CEO Changpeng Zhao filed court papers requesting for the termination of the lawsuit by the U.S. Securities and Exchange commission (SEC).
In a 60-page petition, Binance and Zhao contended that the SEC exceeded its jurisdiction by filing a lawsuit against them. The SEC had leveled various accusations, such as mishandling customer funds, misleading investors and regulators, and violating securities regulations. Binance and Zhao, in their bid to dismiss the lawsuit, accused the regulator of seeking to apply penalties retroactively, even before offering any public guidance on cryptocurrencies.
In their petition, the defendants' lawyers argue that the SEC is attempting to assert regulatory authority over the cryptocurrency industry by misinterpreting the language of securities laws. Additionally, Binance.US, formerly known as BAM Trading Services Inc., submitted a separate 56-page document seeking the dismissal of charges against them.
In June, the SEC filed charges against Binance, Binance.US, and Zhao, all of whom have publicly refuted the accusations. This legal action came on the heels of a lawsuit by the US derivatives regulatory body in March, which claimed that Binance and Zhao had consistently violated its regulations.
In the wake of the regulatory crackdown, both Binance and Binance.US have witnessed significant declines in their market shares. Furthermore, Binance.US's CEO departed earlier this month, a move that coincided with a reduction of approximately one-third of the platform's staff.
Additionally, Changpeng 'CZ' Zhao has also addressed the issue of misleading news circulating within the crypto community. This comes in response to an initial report that erroneously stated Zhao had secured a $250 million loan from BAM Management U.S. Holdings, a claim he promptly refuted as inaccurate. This incident underscores the importance of investors conducting their own thorough research, particularly in the rapidly evolving and intricate realm of cryptocurrency.
The revised account clarifies that CZ Zhao extended a $250 million loan to BAM Management U.S. Holdings, of which $183 million was subsequently conveyed to BAM Trading via Paxos. This action occurred in the aftermath of the SEC's substantial lawsuit against Binance, and newly disclosed court records have raised inquiries concerning these financial dealings.
The SEC's legal action alleges that Binance and Zhao displayed a "flagrant disregard" for U.S. securities laws, amassing billions for themselves while jeopardizing investor interests. In reply, Binance US has consistently asserted that the SEC's requests are unjust.
Further complicating matters is the involvement of Ceffu, an institutional crypto custodian associated with Binance. The SEC suspects that Ceffu serves as a conduit between Binance US and Binance Holdings. However, CZ Zhao has refuted this assertion, asserting that Binance US has "never utilized Ceffu or Binance Custody."