Binance CEO Changpeng Zhao and his cryptocurrency exchange have taken a significant step by jointly filing a motion requesting the dismissal of a lawsuit filed against them by the United States Securities and Exchange Commission (SEC).
In a submission made on September 21 to the United States District Court, both Binance Holdings and Changpeng Zhao argued that the SEC’s actions had gone beyond their legal authority in this lawsuit.
Their extensive 60-page petition strongly argued that the SEC had failed to establish clear guidelines for the cryptocurrency industry before initiating legal proceedings against the exchange. Consequently, they claimed that the SEC was attempting to retroactively impose its regulatory control over cryptocurrency, even for transactions dating as far back as July 2017, a time when the SEC had not yet provided any public guidance on cryptocurrencies.
The legal team representing Binance and Zhao maintained that the SEC’s lawsuit lacked a solid foundation in existing securities laws.
Furthermore, Binance’s legal team asserted that the SEC had misinterpreted securities laws in their application to cryptocurrency assets. This suggests that the regulator was distorting the language of these laws to expand its regulatory authority over the crypto industry.
In addition to the motion filed by Binance and Changpeng Zhao, Binance’s American branch, Binance.US, also submitted a separate 56-page filing on the same day, seeking the dismissal of the charges brought against it by the SEC.
It’s important to note that the SEC had initiated a lawsuit against Binance and its affiliates on June 5, alleging that Binance had engaged in the sale of unregistered securities and had been operating unlawfully in the United States.
This legal action by the SEC followed a similar lawsuit by the Commodity Futures Trading Commission (CFTC), which had sued Binance three months earlier, citing the exchange’s failure to register with the CFTC and violations of its regulations.
Moving on to a different topic, an executive from the cryptocurrency exchange Binance disclosed during a public hearing with the European Banking Authority (EBA) that the platform has plans to remove stablecoins from the European market by June 2024.
Marina Parthuisot, who serves as the head of legal for Binance France, explained that since no stablecoin projects have received regulatory approval yet, Binance is inclined towards delisting all stablecoins in Europe by June 30. She pointed out that this decision could have a significant impact on the European market, especially when compared to the broader global cryptocurrency market.
These statements come after the introduction of Europe’s significant cryptocurrency regulation, the Markets in Crypto-Assets (MiCA) law, which was passed earlier in the year in June. Provisions related to stablecoins within this legislation are scheduled to become effective one year later, in June 2024.
Elizabeth Noble, a team leader for MiCA at the EBA, responded to Parthuisot’s statements, clarifying that there are no transitional arrangements for stablecoin tokens, and the rules will start to apply at the end of June next year.
It’s worth noting that Binance has previously reversed decisions regarding asset delisting. On June 26, the exchange changed its decision to delist privacy coins in Europe, citing a revision of its operations to align with European Union standards and considering feedback from its community and various projects.
Regarding stablecoins, legal experts monitoring developments around the new EU legislation had commented in July that the stablecoin transaction cap imposed by MiCA could potentially hinder crypto adoption. MiCA introduces a cap of $216 million on stablecoins, including those with Tether (USDT) and USD Coin (USDC) tickers.
In response to these developments, Binance CEO Changpeng Zhao clarified on social media on September 21 that a previous comment had been taken out of context. He affirmed that Binance has plans to launch EUR and other stablecoins in fully compliant ways, indicating their readiness to meet regulatory requirements. Zhao had previously expressed optimism about MiCA, emphasizing the exciting opportunities it presents for compliant businesses in Europe.