In a surprising turn of events last week, the US Securities and Exchange Commission (SEC) filed 13 charges against the largest cryptocurrency exchange by volume, Binance, as well as Binance.US, and its CEO Changpeng “CZ” Zhao. These charges are inclusive of operating unregistered exchanges and engaging in an unregistered offer and sale of securities. However, Binance’s legal team has recently submitted several motions in the US District Court for the District of Columbia, aiming to stall this lawsuit, stating that “there is no emergency” in this situation.
According to the SEC, Binance and its leadership have not only misled investors about their risk controls but also have been practicing manipulative trading and evading US securities laws. However, Binance’s attorneys argue that the timing of these charges raises eyebrows, especially considering the suit was filed simultaneously with a similar one targeting Coinbase, the largest cryptocurrency exchange in the United States.
Arguing against the SEC’s allegations, Binance’s legal team highlights the questionable due process implications of this legal action, particularly noting the personal interactions between SEC Chair Gary Gensler and Binance during the same time frame. Furthermore, Binance’s lead attorney, Daniel W. Nelson, questions why the SEC did not intervene sooner if the exchange has been operating unlawfully since its launch in 2017.
Adding to the mounting skepticism against the SEC’s claims, Binance’s attorneys assert that the agency has opted for an ad-hoc enforcement rather than following the proper rulemaking process as required by the Administrative Procedure Act. This move can be seen as an opportunistic attempt to capitalize on incomplete information and an expedited schedule, potentially causing undue harm to the cryptocurrency market.
While Binance claims to have been engaging with the SEC since 2021, it was only in February 2023 that they became aware of their status as potential targets of an investigation related to the Binance.US exchange. This late revelation casts further doubt on the SEC’s intentions and the legitimacy of their allegations.
In conclusion, the recent charges filed against Binance, Binance.US, and their CEO present a complex situation with potential far-reaching consequences. As the largest cryptocurrency exchange faces a legal battle in the US, this case raises significant questions about the appropriate scope of regulatory intervention, due process, and the balance of power between regulators and the innovative technology sector. With the integrity of both parties under scrutiny, the world eagerly awaits the outcome of this conflict, which may well define the future of cryptocurrency regulation.
Source: Decrypt
